Question

A firm expects to sell 24.000 units of its product at $10.00 per unit and to incur variable costs per unit of $5.00 Total fixed costs are $59,000 The total contribution margin is

a. $61,000.
b. $59,000.
c. $120,000.
d. $130,000.
e. $179,000

Answer 1

The total contribution margin for the firm is calculated by subtracting total variable costs from total revenues, which results in a total contribution margin of $120,000.

Step-by-step explanation:

The question concerns determining the total contribution margin for a firm with specific unit sales, selling price, variable costs, and fixed costs. The total contribution margin is calculated by subtracting the total variable costs from the total revenues. To find the answer, you multiply the number of units (24,000) by the selling price per unit ($10.00), then subtract the product of the number of units and the variable cost per unit ($5.00).

Here's the calculation:

Total Revenues = 24,000 units × $10.00 = $240,000
Total Variable Costs = 24,000 units × $5.00 = $120,000
Total Contribution Margin = Total Revenues - Total Variable Costs
= $240,000 - $120,000
= $120,000

Thus, the correct answer is option c, $120,000.