Question

Martin Company currently produces and sells 40,000 units of product at a selling price of $12. The product has variable costs of $6 per unit and fixed costs of $150,000. The company currently earns a total contribution margin of: ________.

a. $280,000
b. $200,000
c. $240,000
d. $90,000

Answer 1

Answer:Total contribution margin = $240,000---c

Step-by-step explanation:

Contribution margin is the revenue left after removing the variable costs that are incurred in producing a product. This margin helps one to know how profitability each item is that a company produces and puts up for sale.

It is calculated as

Contribution per unit = selling price per unit - variable costs per unit.

$12-$6 = $6

Total contribution margin = Contribution per unit x number of units sold.

$6 x 40,000 units

= $240,000