The following selected data relates to Lazarus Corporation: $$\begin{array} { | l | r | }
\hline \text { Tatal fixed costs } & \$ 22,000 \
\hline \text { Sale price per unit } & \$ 25 \
\hline \text { Variable costs per urit } & \$ 18 \
\hline
\end{array}$$
-If sales revenue per unit increases to $27 and 8,000 units are sold,what is the contribution margin?

Question

The following selected data relates to Lazarus Corporation: $$\begin{array} { | l | r | } 
\hline \text { Tatal fixed costs } & \$ 22,000 \
\hline \text { Sale price per unit } & \$ 25 \
\hline \text { Variable costs per urit } & \$ 18 \
\hline
\end{array}$$ 
-If sales revenue per unit increases to $27 and 8,000 units are sold,what is the contribution margin?

Quizplus · Accepted Answer

Contribution margin per unit = selling price per unit - variable cost per unit
Given data does not provide variable cost per unit, hence we cannot calculate contribution margin per unit.
Contribution margin = contribution margin per unit * number of units sold
Contribution margin = (27 - variable cost per unit) * 8,000
We do not have variable cost per unit, hence we cannot calculate contribution margin. Therefore, we cannot choose options A, B, or D as they have incorrect values for contribution margin. 
Option C is the best choice, as it is the only option that we cannot eliminate based on given data.

The Following Selected Data Relates to Lazarus Corporation -If Sales Revenue Per Unit Increases to $27 and 8,000