A firm expects to sell 25,000 units of its product at $11 per unit and to incur variable costs per unit of $6.Total fixed costs are $70,000.The total contribution margin is:
A)$55,000.
B)$90,000.
C)$125,000.
D)$150,000.
E)$380,000.

Question

Quizplus · Accepted Answer

Total revenue = 25,000 x $11 = $275,000
Total variable cost = 25,000 x $6 = $150,000
Total contribution margin = Total revenue - Total variable cost - Total fixed cost
= $275,000 - $150,000 - $70,000 
= $55,000 + $125,000 
= $125,000

A Firm Expects to Sell 25,000 Units of Its Product