Question

Quaker Corporation sold 6,600 units of its product at a price of $42.40 per unit. Total variable cost per unit is $19.25, consisting of $10.15 in variable production cost and $9.10 in variable selling and administrative cost. Compute contribution margin for the company.

Answer 1

The Unit CM will be 23.15

The total contribution will be 152,790

Step-by-step explanation:

`Sales \: Revenue - Variable \: Cost = Contribution \: Margin`

42.40 Sales Revenue

(19.25) Variable cost

23.15 Contribution Margin per unit

This is the amount per unit after paying the variable cost.

`Contribution \: per \: unit * units \: sold = Total \: Contribution \: Margin`

`23.15 * 6,600 = 152.790`

This will be the complete contribution generated for the product. It will be used to pay the fixed cost and the remainder will be operating gains.