Mow Power produces and sells custom lawn mowers. Each lawn mower sells for $220 and has a contribution margin of $132 per unit. Monthly fixed costs are $35,200 The cost equation for Mow Power's lawn mowers is
A) Y = $132X + $35,200
B) Y = $88X + $35,200
C) Y = $220X - $35,200
D) Y = $88X - $35,200

Question

Quizplus · Accepted Answer

Unit variable cost = Unit selling price - Unit contribution margin = $220 - $132 = $88; The cost
 equation is the total costs = (Unit Variable cost * X) + Total Fixed Costs = $88X + $35,200.

Mow Power Produces and Sells Custom Lawn Mowers