Question

Dartmount Corporation has provided its contribution format income statement for June. The company produces and sells a single product. Sales (3,600 units) $ 334,800 Variable costs 144,000 Contribution margin 190,800 Fixed costs 135,800 Operating profit $ 55,000 If the company sells 3,800 units, its total contribution margin should be closest toa. $58,056.b. $209,400.c. $190,800.d. $201,400.

Answer 1

Answer:

Option D is correct ($201,400)

Explanation:

Option D is correct ($201,400)

Contribution margin:

It is the difference in the selling price per unit and all the variable costs per unit.

Contribution margin= Selling price per unit- Variable cost per unit

In our case:

Total units=3,600

Total selling price=$ 334,800

Selling price of one unit=Total selling price/Total units

Selling price of one unit=$\frac{334800}{3600}=93$

Total variable cost=$144,000

Variable Cost Per unit=Total variable cost/Total units

Variable Cost Per unit=$\frac{144000}{3600}=40$

Contribution margin= Selling price per unit- Variable cost per unit

Contribution margin= 93-40

Contribution margin= 53

If the company sells 3,800 units:

Total Contribution margin= 53*3,800

Total Contribution margin= $201,400