An organization is projecting sales of 100,000 units, at a unit price of $12. Unit variable costs are $7. If fixed costs are $350,000, what is the projected total contribution margin?
An organization is projecting sales of 100,000 units, at a unit price of $12. Unit variable costs are $7. If fixed costs are $350,000, what is the projected total contribution margin?
To determine the projected total contribution margin, we first calculate the contribution margin per unit by subtracting the unit variable cost from the unit price ($12 - $7 = $5). Next, we multiply the contribution margin per unit by the projected number of units sold (100,000 units * $5 per unit = $500,000). Therefore, the projected total contribution margin is $500,000.
You just subtract SP and VC (12-7=5) to get contribution per unit. Thereafter multiply 5 * 100,000 and you get the contribution margin of 500,000
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I do not understand ..please explain
}Contribution Margin=Sales Revenue − Variable Costs