Questions: Sunshine Blender Company sold 7,000 units in October at a sales price of 50 per unit. The variable cost is 15 per unit. Calculate the total contribution margin. (Select the closest one) (A) 50,000 (B) 100,000 (C) 150,000 (D) 200,000 F) 250,000

Solution Steps

To calculate the total contribution margin, we need to determine the difference between the sales price per unit and the variable cost per unit, and then multiply that difference by the number of units sold.

The contribution margin per unit is calculated as follows: \[ \text{Contribution Margin per Unit} = \text{Sales Price per Unit} - \text{Variable Cost per Unit} \] Substituting the given values: \[ \text{Contribution Margin per Unit} = 50 - 15 = 35 \]

The total contribution margin is calculated by multiplying the contribution margin per unit by the total number of units sold: \[ \text{Total Contribution Margin} = \text{Contribution Margin per Unit} \times \text{Units Sold} \] Substituting the values: \[ \text{Total Contribution Margin} = 35 \times 7000 = 245000 \]

Final Answer