Sorin Inc., a company that produces and sells a single product, has provided its contribution format income statement for January. If the company sells 4,600 units, its total contribution margin should be closest to:

Question

Sorin Inc., a company that produces and sells a single product, has provided its contribution format income statement for January.  If the company sells 4,600 units, its total contribution margin should be closest to:

Quizplus · Accepted Answer

Selling price per unit = Sales ÷ Quantity sold
= $155,400 ÷ 4,200 units = $37 per unit
Variable expenses per unit = Variable expenses ÷ Quantity sold
Variable expenses per unit = $100,800 ÷ 4,200 units = $24 per unit
Unit CM = Selling price per unit - Variable expenses per unit
= $37 per unit - $24 per unit = $13 per unit
Total CM = Unit CM × Quantity sold
= $13 per unit × 4,600 units = $59,800

Sorin Inc, a Company That Produces and Sells a Single Product