Math Problem Statement
Wight Corporation has provided its contribution format income statement for June. The company produces and sells a single product.
Sales (5,600 units) $ 235,200 Variable expenses 112,000 Contribution margin 123,200 Fixed expenses 47,200 Net operating income $ 76,000 If the company sells 5,700 units, its total contribution margin should be closest to:
Note: Do not round intermediate calculations.
Group of answer choices
$123,200
$125,400
$127,400
$77,357
Solution
To calculate the contribution margin for 5,700 units, let's follow these steps:
Step 1: Calculate Contribution Margin per Unit
Given:
- Total Contribution Margin = $123,200 (for 5,600 units)
Step 2: Calculate Contribution Margin for 5,700 Units
Now that we know the contribution margin per unit is $22, we can find the total contribution margin for 5,700 units:
Final Answer:
The total contribution margin for 5,700 units is:
So, the correct answer is:
$125,400
Do you have any further questions or need more details?
Here are 5 related questions to expand your understanding:
- What is the relationship between contribution margin and net operating income?
- How does an increase in fixed costs affect net operating income?
- What happens to the contribution margin if the selling price per unit increases?
- Can the contribution margin be negative, and what does that indicate?
- How is the break-even point affected by changes in variable expenses per unit?
Tip: Contribution margin helps determine how much of the sales revenue is available to cover fixed expenses and generate profits.
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Math Problem Analysis
Mathematical Concepts
Contribution Margin
Unit Analysis
Linear Relationships
Formulas
Contribution Margin per Unit = Total Contribution Margin / Number of Units
Total Contribution Margin = Contribution Margin per Unit * Number of Units
Theorems
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Suitable Grade Level
Undergraduate Business/Accounting
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