Question

 Decko industries reported the following data.

Units Produced 52,000 units
Sales Price $33 per unit
Direct Materials $1.50 per unit
Direct Labor $2.50 per unit
Variable Overhead $3.50 per unit
Fixed Overhead $234,000 in total

What is the company's contribution margin for this month if 50,000 units were sold?

A) 1,716,000 ;
B)1,275,000 ;
C) 1,650,000 ;
D) 1,326,000 ;
E) 1,450,000

Answer 1

The contribution margin for Decko Industries is calculated by subtracting all variable costs per unit from the sales price per unit, then multiplying by the number of units sold. The contribution margin per unit is $25.50, leading to a total contribution margin of $1,275,000 for the month.

Step-by-step explanation:

To calculate the contribution margin for Decko Industries, we need to subtract all variable costs per unit from the sales price per unit, and then multiply by the number of units sold. The variable costs per unit include direct materials, direct labor, and variable overhead.

The contribution margin per unit is calculated as follows:

• Sales price per unit: $33
• Direct materials per unit: $1.50
• Direct labor per unit: $2.50
• Variable overhead per unit: $3.50

Contribution Margin per unit = Sales price per unit - (Direct materials per unit + Direct labor per unit + Variable overhead per unit)

Contribution Margin per unit = $33 - ($1.50 + $2.50 + $3.50) = $33 - $7.50 = $25.50 per unit

To find the total contribution margin, multiply the contribution margin per unit by the number of units sold:

Total Contribution Margin = Contribution Margin per unit × Number of units sold = $25.50 × 50,000 = $1,275,000

Therefore, the contribution margin for Decko Industries for this month is $1,275,000.