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29 April, 00:43

Boersma Sales, Inc., a merchandising company, reported sales of 7,100 units in September at a selling price of $682 per unit. Cost of goods sold, which is a variable cost, was $317 per unit. Variable selling expenses were $44 per unit and variable administrative expenses were $22 per unit. The total fixed selling expenses were $157,200 and the total administrative expenses were $338,000 The contribution margin for September was: Multiple Choice $3,878,400 $2,122,900 $2,591,500 $1,627,700

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  1. 29 April, 03:19
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    Answer: $2,122,900

    Explanation:

    In calculating the Contribution Margin for a good we take the Variable Expenses and subtract it from the Sales Price. The amount left is known as the Contribution Margin.

    In the above question, the variable expenses are,

    -Cost of goods sold of $317 per unit.

    - Variable selling expenses of $44 per unit.

    - Variable administrative expenses of $22 per unit.

    There were reported sales of 7,100 units so the Variable costs are,

    = (317 * 7,100) + (44*7,100) + (22*7,100)

    = 2,250,700 + 312,400 + 156,200

    = $2,719,300

    Now subtracting the Variable costs from Sales we have,

    = (682 * 7,100) - 2,719,300

    = $2,122,900

    The Contribution Margin is $2,122,900 so option 2 is correct.
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