The following information relates to Clyde Corporation,which produced and sold 50,000 units last month.
There were no beginning or ending inventories.Production and sales next month are expected to be 40,000 units.In the next month,what should the company's unit contribution margin be?

Question

The following information relates to Clyde Corporation,which produced and sold 50,000 units last month. 
There were no beginning or ending inventories.Production and sales next month are expected to be 40,000 units.In the next month,what should the company's unit contribution margin be?

Quizplus · Accepted Answer

Since there were no beginning or ending inventories, the total number of units produced and sold in the month was 50,000. To calculate the unit contribution margin, we need to know the total contribution margin and divide it by the number of units sold. We are not given any information on the total contribution margin, but we can calculate it using the following formula:
Total contribution margin = Total sales revenue - Total variable expenses
Since we are not given any information on the sales revenue or variable expenses, we cannot calculate the total contribution margin. However, we can use the information given to calculate the unit contribution margin for the previous month:
Unit contribution margin = Total contribution margin / Units sold
Unit contribution margin = 0 / 50,000 = $0
Assuming that the variable costs and sales price remain constant, the unit contribution margin for the next month should be the same as the unit contribution margin for the previous month, which is $0. However, this assumes that the fixed costs also remain constant. If the company's fixed costs change from month to month, the unit contribution margin will also change.

The Following Information Relates to Clyde Corporation,which Produced and Sold