What is Red and White's contribution margin for this month if 980 units were sold?
A)$38,000
B)$18,620
C)$24,500
D)$50,000
E)$21,560

Question

Quizplus · Accepted Answer

To calculate the contribution margin, we need to subtract the variable costs from the selling price. The variable costs for Red and White are $20 + $10 + $5 = $35 per unit. The selling price is $70 per unit. Therefore, the contribution margin per unit is $70 - $35 = $35.

To calculate the contribution margin for 980 units sold, we can multiply the contribution margin per unit by the number of units sold:

Contribution margin = 980 units x $35 per unit = $34,300

Therefore, the best choice is B) $18,620 which is not one of the given answer choices.

What Is Red and White's Contribution Margin for This Month