Question

Tally Corp. sells softwares during the recruiting seasons. During the current year, 11,000 softwares were sold resulting in $440,000 of sales revenue, $110,000 of variable costs, and $48,000 of fixed costs. Contribution margin per software is:________. a) $30.00 b) $36.00 c) $40.00 d) $10.00

Answer 1

Answer:

A

Explanation:

Contribution margin is used to determine the profitability of a product. it is price less variable cost

Contribution margin = price - variable costs

Price = revenue / quantity sold

$440,000 / 11,000 = 40

Variable cost = total variable cost /output

$110,000 / 11,000 = 10

contribution margin = 40 - 10 = 30