Question

Monica has found that her contribution margin per hour of time for her highest selling product is $2,500. She wants to dedicate an extra 40 hours a month to this product, but she needs to know the increase in contribution margin if she does this. The product generally sells for $100 a unit. What would be the increase in contribution margin for this product?

Answer 1

Answer:

$100,000

Explanation:

Calculation for what would be the increase in contribution margin for this product

Using this formula

Increase in contribution margin= Contribution margin per hour of time × Extra hours

Let plug in the formula

Increase in contribution margin=$2,500×40 hours

Increase in contribution margin=$100,000

Therefore What would be the increase in contribution margin for this product will be $100,000