A company with monthly fixed costs of $220,000 expects to earn monthly operating
ID: 2797315 • Letter: A
Question
A company with monthly fixed costs of $220,000 expects to earn monthly operating income of $30,000 by selling 5,000 units per month. What is the company's expected unit contribution margin?
$50.
$44.
$6.
The information given is insufficient to determine unit contribution margin.
A company with monthly fixed costs of $220,000 expects to earn monthly operating income of $30,000 by selling 5,000 units per month. What is the company's expected unit contribution margin?
$50.
$44.
$6.
The information given is insufficient to determine unit contribution margin.
Explanation / Answer
contribution margin-Fixed costs=Target operating income
Hence contribution margin=(220,000+30,000)=$250,000
Hence unit contribution margin=($250,000/5000 units)
=$50(A)