Asked by Lauren Chavis on May 01, 2024
Verified
M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1,000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. Calculate the contribution margin per camera.
A) 275
B) 250
C) 225
D) 300
E) 325
Variable Costs
Costs that vary directly with the level of production or output, such as materials and labor.
Contribution Margin
The selling price per unit, minus the variable cost per unit, used to determine the profitability of products or services.
Fixed Costs
Business expenses that remain constant regardless of the level of goods or services produced.
- Assess and recognize the significance of both the per-unit and total contribution margins.
Verified Answer
HD
Hannah DaschilMay 04, 2024
Final Answer :
A
Explanation :
The contribution margin per camera is calculated by subtracting the variable costs from the selling price. Therefore, $500 - $225 = $275.
Learning Objectives
- Assess and recognize the significance of both the per-unit and total contribution margins.
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