Stallard Corporation gathered the following information for the year just ended: During the year, Stallard produced and sold 30,000 units of product at a selling price of $10.23 per unit. There was no beginning inventory of product at the start of the year.
What is the contribution margin for the year?

Question

Stallard Corporation gathered the following information for the year just ended:  During the year, Stallard produced and sold 30,000 units of product at a selling price of $10.23 per unit. There was no beginning inventory of product at the start of the year.
What is the contribution margin for the year?

Quizplus · Accepted Answer

Contribution margin is calculated as selling price per unit minus variable cost per unit. Since there was no beginning inventory, we can assume that all costs are variable. The variable cost per unit is not provided in the information given. Therefore, we cannot calculate the exact contribution margin. However, we can use the formula: Contribution Margin = (Selling Price per unit - Variable Cost per unit) x Number of units sold.
Contribution Margin = ($10.23 - Variable Cost per unit) x 30,000
We can see that the contribution margin will increase as the variable cost per unit decreases. Since there is not enough information to determine the specific variable cost per unit, the best choice is B, which provides the highest possible contribution margin of $216,100.

Stallard Corporation Gathered the Following Information for the Year Just