Based on a predicted level of production and sales of 19,000 units, a company anticipates total variable costs of $70,300, fixed costs of $32,300, and operating income of $140,600. Based on this information, the budgeted amount of contribution margin for 17,000 units would be:

Question

Alexa Simon

Business

6 November, 09:44

Based on a predicted level of production and sales of 19,000 units, a company anticipates total variable costs of $70,300, fixed costs of $32,300, and operating income of $140,600. Based on this information, the budgeted amount of contribution margin for 17,000 units would be:

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Answers (1)

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Gia Horton · Answer 1

Total Contribution margin = $154,700

Explanation:

Giving the following information:

Based on a predicted level of production and sales of 19,000 units, a company anticipates total variable costs of $70,300, fixed costs of $32,300, and operating income of $140,600.

First, we need to calculate the selling price and unitary variable cost:

Unitary variable cost = 70,300/19,000 = $3.7

Sales = Operating income + fixed costs + variable cost

Sales = 140,600 + 32,300 + 70,300 = 243,200

Unitary selling price = 243,200/19,000 = $12.8

Now, we can calculate the total contribution margin for 17,000 units.

Total Contribution margin = 17,000 * (12.8 - 3.7) = $154,700