Question

Capity Tea Products has an exclusive contract with British Distributors. Calamine and Capity are two brands of teas that are imported and sold to retail outlets. The following information is provided for the month of March:
Actual Budget
Calamine Capity Calamine Capity
Sales in pounds 3800 lbs. 3980 lbs. 4,400 lbs. 3,300 lbs
Price per pound $3.00 $2.90 $2.00 $3.00
Variable cost per pound 1.00 2.20 1.00 1.50
Contribution margin $2.00 $0.70 $1.00 $1.50
Budgeted and actual fixed corporate-sustaining costs are $1,850 and $2,300, respectively.

What is the actual contribution margin for the month?
a. $12,236
b. $9770
c. $9900
d. $10,386

Answer 1

Answer:

Option D 10,386

Explanation:

The contribution is the amount left from sales after paying the variable cost. In this case we are given with this value so we don't have to calcualte for it.

To get for the contribution margin we will consider the actual values over the budget.

3,800 Calmine pounds x 2 dollar of contribution per pound = 7,600

3,980 Capity pounds x 0.70 dollars per pound = 2,786

Total: 7,600 + 2,786 = 10,386