Orion Company sells several products.Information of average revenue and costs is as follows:

The company sells 12,000 units at the end of the year.
If direct labor and direct material costs increase by $1 each,contribution margin ________.

Question

Orion Company sells several products.Information of average revenue and costs is as follows:

The company sells 12,000 units at the end of the year.
If direct labor and direct material costs increase by $1 each,contribution margin ________.

Quizplus · Accepted Answer

Contribution margin = ($23 − $5 − $2.70 − $0.40 − $2)× 12,000 = $154,800.
The previous contribution margin was $178,800 which means it decreased by $24,000

Orion Company Sells Several Products