Question

A firm expects to sell 24,700 units of its product at $10.70 per unit and to incur variable costs per unit of $5.70. total fixed costs are $67,000. the total contribution margin is:

Answer 1

To find the total contribution margin, subtract the total variable costs from the total revenue. In this case, $123,400.

Step-by-step explanation:

The student's question requires calculating the total contribution margin for a firm expecting to sell products while accounting for variable costs and total fixed costs. Contribution margin is the difference between sales revenue and variable costs of a product. It is a measure of the ability of a company to cover its fixed costs with sales.

First, we need to calculate the contribution margin per unit, which is the selling price per unit minus the variable cost per unit. Then, we will multiply this figure by the total number of units sold to get the total contribution margin.

Here's the step-by-step calculation:

Calculate the contribution margin per unit: $10.70 (selling price per unit) - $5.70 (variable cost per unit) = $5.00 contribution margin per unit.

Multiply the contribution margin per unit by the total number of units sold: $5.00 contribution margin per unit * 24,700 units = $123,500 total contribution margin.

The total contribution margin is $123,500. This is calculated by subtracting the variable cost per unit from the selling price and multiplying by the number of units sold.