Oak N' More Corporation sells desks at $480 per desk. The costs associated with each desk are as follows: $\begin{array}{ll}
\text { Direct materials } & \$ 195 \
\text { Direct labor } & 126 \
\text { Variable factory overhead } & 51
\end{array}$ Total fixed costs for the period are $456,840. The contribution margin per desk is:
A) $108
B) $195
C) $51
D) $126

Question

Quizplus · Accepted Answer

The contribution margin is the difference between the selling price and the variable costs. The variable costs are the direct materials, direct labor, and variable factory overhead. So, the contribution margin per desk is:$480 - $195 - $126 - $51 = $108