Anders Supply experienced the following costs in May: $\begin{array}{lr}
\text { Direct materials } & \$ 6.50 \text { per unit } \
\text { Direct labor } & \$ 2.20 \text { per unit } \
\text { Manufacturing overhead costs } & \
\quad \text { Variable } & \$ 3.10 \text { per unit } \
\quad \text { Fixed } & \$ 44,000 \
\text { Selling \& administrative costs } & \
\quad \text { Variable selling costs } & \$ 1.50 \text { per unit } \
\quad \text { Fixed selling costs } & \$ 21,000 \
\text { Fixed administrative costs } & \$ 16,000
\end{array}$ During May, the company manufactured 22,000 units and sold 24,000 units.Beginning inventory totaled 3,400 units.If the average selling price per unit was $28, how much is the company's contribution margin?
A)$327,400
B)$352,800
C)$323,400
D)$344,800

Question

Quizplus · Accepted Answer

The contribution margin is calculated as the difference between the selling price per unit and the variable costs per unit, multiplied by the number of units sold. Variable costs include direct materials, direct labor, variable manufacturing overhead, and variable selling costs. $$ \text{Variable costs per unit} = \$6.50 + \$2.20 + \$3.10 + \$1.50 = \$13.30 $$$$ \text{Contribution margin per unit} = \$28.00 - \$13.30 = \$14.70 $$$$ \text{Total contribution margin} = \$14.70 \times 24,000 \text{ units} = \$352,800 $$Therefore, the company's contribution margin is $352,800.

Anders Supply Experienced the Following Costs in May During May, the Company Manufactured 22,000 Units and Sold 24,000