Answer:
The answer is C. $40,000
Explanation:
Contribution margin = Sales - variable cost
Also we have:
Contribution margin per unit = Selling price per unit - variable cost per unit
we have:
The selling price of one unit is calculated as follows:
Total amount gotten from sales divided by the total units sold, viz:
= $48,000 ÷ 12,000 units
= $4
The variable cost per unit is calculated as follows:
Total variable cost incurred divided by the total amount of units produced, viz:
= $18,000 ÷ 12,000 units
= $1.5
Therefore, the contribution margin per unit is calculated as follows:
= $4 - $1.5
= $2.5
The contribution margin for 16,000 units is therefore calculated as follows:
= 16,000 units × $2.5
= $40,000
