Sammis Inc., which produces and sells a single product, has provided its contribution format income statement for January. If the company sells 2,600 units, its total contribution margin should be closest to:
A)$107,100
B)$117,000
C)$31,290
D)$130,500

Question

Sammis Inc., which produces and sells a single product, has provided its contribution format income statement for January.  If the company sells 2,600 units, its total contribution margin should be closest to:
A)$107,100 
B)$117,000 
C)$31,290 
D)$130,500

Quizplus · Accepted Answer

To find the total contribution margin for 2,600 units, we need to calculate the contribution margin per unit and then multiply it by the number of units sold.

Contribution margin per unit = selling price per unit - variable expenses per unit

In the given income statement, we can see that selling price per unit is $80 and variable expenses per unit are $36, so contribution margin per unit = $80 - $36 = $44.

Total contribution margin for 2,600 units sold = 2,600 units x $44 per unit = $114,400

Therefore, the closest option to this value is B) $117,000.