Question

Wight Corporation has provided its contribution format income statement for June. The company produces and sells a single product.

Sales (4,400 units) $ 162,800
Variable expenses 79,200
Contribution margin 83,600
Fixed expenses 44,800
Net operating income $ 38,800
If the company sells 4,500 units, its total contribution margin should be closest to: (Do not round intermediate calculations.)

Multiple Choice

a-$39,682
b-$85,500
c-$83,600
d-$87,300

Answer 1

To calculate the total contribution margin when the company sells 4,500 units, divide the contribution margin by the number of units sold and then multiply by the new number of units sold. Option b

Step-by-step explanation:

To calculate the total contribution margin when the company sells 4,500 units, we can first determine the contribution per unit. The contribution per unit is calculated by dividing the contribution margin by the number of units sold:

Contribution per unit = Contribution margin / Number of units sold = $83,600 / 4,400 units = $19 per unit

Then, we can multiply the contribution per unit by the new number of units sold to find the total contribution margin:

Total contribution margin = Contribution per unit x Number of units sold = $19 x 4,500 units = $85,500. Option b