Searls Corporation, a merchandising company, reported the following results for

Question

Searls Corporation, a merchandising company, reported the following results for July:

Cost of goods sold is a variable cost in this company.

The contribution margin for July is:

A) $699,300

B) $1,453,400

C) $534,600

D) $359,900

Number of units sold 2,700 units Selling price per unit $664 per unit Unit cost of goods sold $405 per unit Variable selling expense per unit $48 per unit Total fixed selling expense $56,500 Variable administrative expense per unit $13 per unit Total fixed administrative expense $118,200

Explanation / Answer

option C) 534600 is correct

Sales (2,700 units × $664 per unit) . .............................................                                                        $1,792,800

Variable expenses: Cost of goods sold (2,700 units × $405 per unit). ..................... $1,093,500

Variable selling expense (2,700 units × $48 per unit). ..............                                129,600

Variable administrative expense (2,700 units × $13 per unit) . .                             35,100                  1,258,200

Contribution margin. .....................................................................                                                             $534,600

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