Question

DartmountCorporation has provided its contribution format income statement for June. The company produces and sells a single product. Sales (2,900 units) = $269,700. Variable costs = $107,300. Contribution margin = $162,400. Fixed costs = $137,100. Operating profit = $25,300. If the company sells 3,100 units, its total contribution margin should be closest to: A) $173,600. B) $162,400. C) $181,000. D) $27,045.

Answer 1

• The Contribution margin for 3,100 units can be calculated by first calculating contribution margin per unit.
• The contribution margin per unit is then multiplied by 3100 units to calculate the answer value.

A	Given contribution margin for 2,900 units	$         162,400.00
B = A / 2,900 units	Contribution margin per unit	$                    56.00
C = 3,100 units x B	Answer: Contribution margin if 3,100 units are sold	$          173,600.00
	Correct Answer	Option 'A': $ 173,600

• Correct Answer = Option A: $ 173,600