Answer: Contribution Margin = $20,000
Explanation:
Given that,
Sales (90 units) = $90,000
Direct materials cost = $40,000
Direct labor cost = 20,000
Variable factory overhead = 2,000
Fixed factory overhead = 7,000 and 69,000
Variable operating expenses = $8,000
Fixed operating expenses = 1,000 and 9,000
Therefore,
Contribution Margin = Sales - Variable cost of goods sold
= 90000 - (Direct materials cost + Direct labor cost + Variable factory overhead + Variable operating expenses)
= 90000 - $40,000 - 20,000 - 2,000 - 8,000
= $20,000
∴ Contribution Margin = $20,000
