Answer:
Option D is correct ($201,400)
Explanation:
Option D is correct ($201,400)
Contribution margin:
It is the difference in the selling price per unit and all the variable costs per unit.
Contribution margin= Selling price per unit- Variable cost per unit
In our case:
Total units=3,600
Total selling price=$ 334,800
Selling price of one unit=Total selling price/Total units
Selling price of one unit=[tex]\frac{334800}{3600}=93[/tex]
Total variable cost=$144,000
Variable Cost Per unit=Total variable cost/Total units
Variable Cost Per unit=[tex]\frac{144000}{3600}=40[/tex]
Contribution margin= Selling price per unit- Variable cost per unit
Contribution margin= 93-40
Contribution margin= 53
If the company sells 3,800 units:
Total Contribution margin= 53*3,800
Total Contribution margin= $201,400
