Question

Orchid Corp. has a selling price of $15, variable costs of $12 per unit, and fixed costs of $27,000. If Orchid sells 11,500 units, contribution margin will equal:

Answer 1

Total contribution margin= $34,500

Step-by-step explanation:

Giving the following information:

Selling price= 15

Unitary variable cost= 12

First, we need to calculate the unitary contribution margin:

Unitary contribution margin= selling price - unitary variable cost

Unitary contribution margin= 15 - 12 = 3

Now, the total contribution margin for 11,500 units:

Total contribution margin= 3*11,500= $34,500