Decko Industries reported the following monthly data:
$\begin{array}{ll}
\text { Units produced } & 52,000 \text { units } \
\text { Sales price } & \$ 33 \text { per unit } \
\text { Direct materials } & \$ 1.50 \text { per unit } \
\text { Direct labor } & \$ 2.50 \text { per unit } \
\text { Variable overhead } & \$ 3.50 \text { per unit } \
\text { Fixed overhead } & \$ 234.000 \text { in total }
\end{array}$

What is the company's contribution margin for this month if 50,000 units were sold?
A) $1,326,000
B) $1,716,000
C) $1,275,000
D) $1,650,000
E) $1,450,000

Question

Decko Industries reported the following monthly data:
$\begin{array}{ll}
\text { Units produced } & 52,000 \text { units } \
\text { Sales price } & \$ 33 \text { per unit } \
\text { Direct materials } & \$ 1.50 \text { per unit } \
\text { Direct labor } & \$ 2.50 \text { per unit } \
\text { Variable overhead } & \$ 3.50 \text { per unit } \
\text { Fixed overhead } & \$ 234.000 \text { in total }
\end{array}$

What is the company's contribution margin for this month if 50,000 units were sold?
A) $1,326,000
B) $1,716,000
C) $1,275,000
D) $1,650,000
E) $1,450,000

Quizplus · Accepted Answer

The contribution margin is calculated as (Sales Price - Variable Costs) * Units Sold. Variable costs per unit are $1.50 (Direct Materials) + $2.50 (Direct Labor) + $3.50 (Variable Overhead) = $7.50. Contribution margin per unit is $33 - $7.50 = $25.50. For 50,000 units sold, the contribution margin is $25.50 * 50,000 = $1,275,000.

Decko Industries Reported the Following Monthly Data What Is the Company's Contribution Margin for This Month If