Econ Pty Ltd produced and sold 45 000 units of a single product last year. Data concerning the year's profit and loss statement are as follows:
What was Econ's total contribution margin for the year?

Question

Econ Pty Ltd produced and sold 45 000 units of a single product last year. Data concerning the year's profit and loss statement are as follows: 
What was Econ's total contribution margin for the year?

Quizplus · Accepted Answer

Total contribution margin can be calculated by subtracting total variable costs from total revenue. Total revenue can be calculated as the product of the number of units sold and the selling price per unit, which is $2,700,000 (45,000 units x $60 per unit). Total variable costs can be calculated as the sum of the variable cost per unit multiplied by the number of units sold, which is $2,160,000 (45,000 units x $48 variable cost per unit). Therefore, the total contribution margin is $540,000 ($2,700,000 - $2,160,000).

Econ Pty Ltd Produced and Sold 45 000 Units of a Single