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9 April, 01:33

Monica has found that her contribution margin per hour of time for her highest selling product is $2,500. She wants to dedicate an extra 40 hours a month to this product, but she needs to know the increase in total contribution margin if she does this. The product generally sells for $100 a unit. What would be the increase in total contribution margin for this product

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  1. 9 April, 04:27
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    The correct answer is $100,000.

    Explanation:

    According to the scenario, the given data are as follows:

    Contribution margin = $2,500 per hour

    Extra time = 40 hours

    Selling price = $100 per unit

    So, we can calculate the increase in contribution margin by using following formula:

    Increase in contribution margin = Contribution margin * Extra time

    By putting the value in the formula, we get

    = $2,500 * 40

    = $100,000
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