Question

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

Sales (8,400 units) $ 764,400
Variable expenses 445,200
Contribution margin 319,200
Fixed expenses 250,900
Net operating income $68,300
If the company sells 8,200 units, its total contribution margin should be closest to:________.
a. $301,000
b. $311,600
c. $319,200
d. $66,674

Answer 1

b. $311,600

Step-by-step explanation:

Calculation to determine what total contribution margin should be closest to:

Using this formula

Contribution margin per unit=Current contribution margin ÷ Current sales in units

Where,

Contribution margin per unit

=$319,200 ÷ 8,400

Contribution margin per unit= $38

Now let determine the total contribution margin

Total contribution margin= 8,200 × $38

Total contribution margin=$311,600

Therefore total contribution margin should be closest to:$311,600