Mario's Pizza sells pizzas for $10.The variable costs for each pizza are $4,while the total fixed costs are $1,500.The contribution margin for 1,000 pizzas is:

Question

Quizplus · Accepted Answer

The contribution margin per pizza is the selling price per pizza ($10) minus the variable cost per pizza ($4) which is $6.

Contribution margin for 1,000 pizzas = 1,000 (pizzas) x $6 (contribution margin per pizza) = $6,000.

To calculate the contribution margin, we do not take fixed costs into consideration since they are not related to the production of individual pizzas. Hence, option A and D can be eliminated.

Option B can be eliminated since it only considers the variable costs and not the contribution margin.

Therefore, the correct answer is C.

Mario's Pizza Sells Pizzas for $10