Question

Decko Industries reported the following monthly data: Units produced 52,000 units Sales price $ 33 per unit Direct materials $ 1.50 per unit Direct labor $ 2.50 per unit Variable overhead $ 3.50 per unit Fixed overhead $ 234,000 in total What is the company's contribution margin for this month if 50,000 units were sold?

Answer 1

Answer:

$1,275,000

Explanation:

The computation of the  contribution margin is shown below:

As we know that

Contribution margin = Sales - variable cost

or

Selling price per unit - variable cost per unit

And, the direct material per unit, direct labor per unit, and the  Variable overhead per unit are variable cost

So, if 50,000 units are sold, the contribution margin per unit is

= 50,000 × ($33 - $1.50 - $2.50 - $3.50)

= $1,275,000