Question

Sorin Inc., a company that produces and sells a single product, has provided its contribution format income statement for January.

Sales (3,700 units) $ 92,500

Variable expenses 55,500

Contribution margin 37,000

Fixed expenses 27,000

Net operating income $ 10,000

If the company sells 4,300 units, its total contribution margin should be closest to:

Answer 1

Total contribution margin when 4,300 units were sold is $43,000

Step-by-step explanation:

The total contribution margin at sales volume of 4,300 units can be computed by first of all calculating the sales revenue at 4,300 units as well as the total variable expenses,the total contribution is simply the sales revenue minus the variable expenses as shown below:

Sales (4,300*92,500/3700) $107,500

Variable expenses(4,300*55,500/3700) ($64,500)

Total contribution margin $43,000

The resulting total contribution is $43,000

Answer 2

total contribution margin should be closest to: $ 43,000

Step-by-step explanation:

Total contribution margin = Sales less Variable Costs

= ($ 92,500/3,700 units×4,300 units) - (55,500/3,700 units×4,300 units)

= $107,500 - $ 64,500

= $ 43,000