Question

Wight Corporation has provided its contribution format income statement for June. The company produces and sells a single product. Sales (4,500 units) $ 180,000 Variable expenses 81,000 Contribution margin 99,000 Fixed expenses 45,000 Net operating income $ 54,000 If the company sells 4,600 units, its total contribution margin should be closest to

Answer 1

Answer: its total contribution margin should be closest to $ 266,800.

Explanation:

Contribution = (Sales )+  (Variable expenses)

= $180,000+ $81,000

= $261,000

Contribution margin ratio = Contribution  divided by Sales

= $\dfrac{261000}{180000}$

= 1.45

Now Contrbution for 4,600 units = $\dfrac{Sales\ for \ 4500\ units\times 4600}{4500}\times 1.45$

$=\dfrac{180000\times4600}{4500}\times1.45\\\\\\=266800$

its total contribution margin should be closest to $ 266,800.