If the Gu Corp. produced 3,000,000 units this year, at a variable cost of $3 per unit and with fixed costs of $1,000,000, and sold all 3,000,000 items at $5 each, its total contribution margin for the year would equal $6,000,000.

Question

Quizplus · Accepted Answer

Contribution Margin = Sales - Variable Costs. 
Sales = 3,000,000 x $5 = $15,000,000 
Variable Costs = 3,000,000 x $3 = $9,000,000 
Contribution Margin = $15,000,000 - $9,000,000 = $6,000,000