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

Question

Quizplus · Accepted Answer

Contribution margin is calculated as selling price per unit minus variable cost per unit.

Contribution margin per unit = $12 - $6 = $6

Total contribution margin = contribution margin per unit × number of units sold = $6 × 40,000 = $240,000

Therefore, the best choice is C) $240,000.

Martin Company Currently Produces and Sells 40,000 Units of Product