Question

Pearson Company sold $5,390 units for $46 each. Variable costs were $27 per unit and total...

Pearson Company sold $5,390 units for $46 each. Variable costs were $27 per unit and total fixed expenses were $15,700. What is Pearson's total contribution margin shown on it's contribution income statement?

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Answer #1

Contribution margin per unit = Selling price per unit - variable cost per unit.

Selling price per unit = $ 46

Varuable cost per unit = $ 27 per unit.

Contribution margin per unit = 46 - 27

Contribution margin per unit = $ 19 per unit.

Total contribution margin = Units sold x contribution margin per unit.

Total contribution margin = 5,390 x $ 19

Total contribution margin = $ 102,410

Hence, $ 102,410 is the correct answer.

SUMMARY:

Contribution margin amounting to $ 102,410 is shown in income statement.

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