Spartan Systems reported total sales of $315,000, at a price of $24 and per unit

ID: 2467982 • Letter: S

Question

Spartan Systems reported total sales of $315,000, at a price of $24 and per unit variable expenses of $12, for the sales of their single product.

What is the amount of contribution margin if sales volume increases by 40%?

$157,500

$76,300

$220,500

$32,700

Spartan Systems reported total sales of $315,000, at a price of $24 and per unit variable expenses of $12, for the sales of their single product.

Total Per Unit Sales $315,000 $24 Variable expenses 157,500 12 Contribution margin 157,500 $12 Fixed expenses 103,000 Net operating income $54,500

What is the amount of contribution margin if sales volume increases by 40%?

$157,500

$76,300

$220,500

$32,700

Answwer: $220500

Total sales units = 315000 / 24 = 13125

If sales volume is increased by 40%

total sales units = 13125 + 13125 * 40% = 13125 + 5250 = 18375 units

Contribution = sales - variable expenses

Contribution = 18375 * 24 - 18375 * 12

= 441000 - 220500

= 220500.

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