Calculate the number of units produced by a business if the net marketing contribution and marketing and sales expenses are $625,000 and $175,000,respectively.The margin per unit is estimated to be $25.
A)50,000
B)25,000
C)32,000
D)76,000
E)43,000

Question

Quizplus · Accepted Answer

First, we need to calculate the contribution margin per unit:

Contribution Margin Per Unit = Margin Per Unit - Marketing and Sales Expenses
Contribution Margin Per Unit = $25 - $175,000/Units Produced

We know the net marketing contribution is $625,000, so we can use the following formula to find the number of units:

Net Marketing Contribution = Contribution Margin Per Unit x Units Produced
$625,000 = ($25 - $175,000/Units Produced) x Units Produced
$625,000 = $25Units Produced - $175,000
$800,000 = $25Units Produced
Units Produced = $800,000/$25
Units Produced = 32,000

Therefore, the answer is C) 32,000.

Calculate the Number of Units Produced by a Business If