Question

LO 3.1A company’s contribution margin per unit is $25. If the company increases its activity level from 200 units to 350 units, how much will its total contribution margin increase?

$1,250
$3,750
$5,000
$8,750

Answer 1

$3,750

Step-by-step explanation:

Total contribution margin will increase by $3,750.

The Company is earning contribution margin of $25 per unit. By increasing the units by 150 (350 - 200), the Company can increase total contribution margin by $3,750 (150 * 25).