Question

Searls Corporation, a merchandising company, reported the following results for July: Number of units sold 2,700 units Selling price per unit $664 per unit Unit cost of goods sold $405 per unit Variable selling expense per unit $48 per unit Total fixed selling expense $56,500 Variable administrative expense per unit $13 per unit Total fixed administrative expense $118,200 Cost of goods sold is a variable cost in this company. The contribution margin for July is: Group of answer choices $534,600 $699,300 $359,900 $1,453,400

Answer 1

Answer:

$534,600

Explanation:

Contribution margin = Sales - Variable Costs

where :

Sales = 2,700 units x $664 = $1,792,800

Variable Costs = Costs of Goods Sold + Variable Selling Costs + Variable Administrative Cots

                        = 2,700 units x $405 + 2,700 units x $48 + 2,700 units x $13

                        = $1,258,200

therefore,

Contribution margin = $1,792,800 - $1,258,200 = $534,600