Question

ouvenir sheets to stamp collectors. The postal service purchases the souvenir sheets from a supplier for $1.80 each. St. Vincent has been selling the souvenir sheets for $14.00 each and ordinarily sells about 100,000 units. To test the market, the postal service recently priced a new souvenir sheet at $12.60 and sales increased to 114,000 units. Required: 1. What total contribution margin did the postal service earn when it sold 100,000 sheets at a price of $14.00 each

Answer 1

Total contribution margin= $1,220,000

Step-by-step explanation:

Giving the following information:

Purchase price= $1.8

Selling price= $14

Number of untis= 100,000

First, we will determine the unitary contribution margin:

Unitary contribution margin= selling price - unitary variable cost

Unitary contribution margin= 14 - 1.8

Unitary contribution margin= $12.2

Now, the total contribution margin:

Total contribution margin= 100,000*12.2

Total contribution margin= $1,220,000