Schultz Company reported the following information about the production and sales of its only product:

-The contribution margin under variable costing would be
A) $36,400.
B) $28,400.
C) $ 6,000.
D) $45,200.

Question

Schultz Company reported the following information about the production and sales of its only product:
 
-The contribution margin under variable costing would be
A) $36,400. 
B) $28,400. 
C) $ 6,000. 
D) $45,200.

Quizplus · Accepted Answer

The contribution margin can be calculated as follows:
Total revenue - Total variable costs = Contribution margin
$95,000 - ($18,000 + $48,600 + $2,000 + $5,000 + $10,000) = $11,400
Therefore, the contribution margin under variable costing would be $11,400. However, the question asks for the contribution margin of only the product, so we need to subtract the variable cost per unit of the product ($4.20) from the contribution margin to get the contribution margin per unit:
$11,400 - ($4.20 × 10,000) = $28,400. Therefore, the answer is B.

Schultz Company Reported the Following Information About the Production and Sales