Question

Last year, Barker Company’s sales were $240,000, its fixed costs were $50,000, and its variable costs were $2 per unit. During the year, 80,000 units were sold. The contribution margin was:

a) $200,000
b) $240,000
c) $30,000
d) $80,000.

Answer 1

The contribution margin for Barker Company is $80,000, which is calculated by subtracting the total variable costs from the sales revenue.

Step-by-step explanation:

You asked about the contribution margin for Barker Company, which can be calculated by subtracting total variable costs from total sales. With sales of $240,000 and variable costs of $2 per unit for 80,000 units, the total variable costs amount to 80,000 units x $2/unit = $160,000. Therefore, the contribution margin is $240,000 - $160,000 = $80,000. The correct answer is d) $80,000.