Question

01 January Beginning inventory 0 Units produced 500 Units sold 400 Ending inventory 100 Excerpt from Wallis Corporation Per Unit Per Month Selling price $ 100 Direct materials 30 Direct labor 20 Variable manufacturing overhead 10 Variable selling and administrative expenses 7 Fixed manufacturing overhead $ 10,000 Fixed selling and administrative expenses 3,000 What is the company's contribution margin for January?

A. $24,000
B. $30,000
C. $32,000
D. $40,000

Answer 1

The correct answer is D.

Step-by-step explanation:

Giving the following information:

Units sold 400

Selling price $ 100

Direct materials 30

Direct labor 20

Variable manufacturing overhead 10

To calculate the total contribution margin, first, we need to calculate the unitary contribution margin:

Unitary contribution margin= selling price - unitary variable cost

UCM= 100 - 30 - 20 - 10= 40

Total CM= 400*40= $40,000