Question

A project has a contribution margin of $2.16 per unit. If the sales price per unit is $11 and the fixed costs are $24,700, what is the amount of total costs at a production level of 6,000 units?

$65,165

$81,080

$57,460

$68,221

$77,740

Answer 1

As we know, The total costs at a production is the aggregate amount of the total variable costs + Total Fixed costs [ie, Total Variable costs + Fixed Costs]

Here, The Sales price per unit and the contribution margin per unit is given, so we can calculate the Variable cost per unit

Variable cost per unit = Selling price per unit – Contribution margin per unit

= $11.00 per unit - $2.16 per unit

= $8.84 per unit

Therefore, The Total costs at a production = Total Variable costs + Fixed Costs

= [6,000 units x $8.84 per unit] + $24,700

= $53,040 + 24,700

= $77,740

“Hence, The Answer is $77,740”