A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The contribution margin expected if the company produces and sells 16,000 units is:

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The contribution margin per unit is calculated as (Sales - Variable Costs) / Units = ($48,000 - $18,000) / 12,000 = $2.50 per unit. For 16,000 units, the contribution margin is 16,000 * $2.50 = $40,000.

A Company's Flexible Budget for 12,000 Units of Production Showed