Question

Green and white company reported the following monthly data: units produced 2,000 units sales price $ 25 per unit direct materials $ 1 per unit direct labor $ 2 per unit variable overhead $ 2.25 per unit fixed overhead $ 8,000 in total variable selling and administrative expenses $ 0.75 per unit fixed selling and administrative expenses $ 2,000 in total what is green and white's contribution margin for this month if 980 units were sold?

Answer 1

The contribution margin for Green and White Company this month is $18,620.

Step-by-step explanation:

To calculate the contribution margin, we need to subtract the variable costs from the sales price. In this case, the variable costs per unit are $1 for direct materials, $2 for direct labor, $2.25 for variable overhead, and $0.75 for variable selling and administrative expenses, making a total of $6 per unit. Therefore, the contribution margin per unit is $25 - $6 = $19.

To calculate the contribution margin for 980 units sold, we multiply the contribution margin per unit ($19) by the number of units sold (980). Therefore, the contribution margin for this month is $19 * 980 = $18,620.