For a manufacturing company, selling price for an item is $500 per Unit, Variable cost is $300 per Unit, rent is $6000 per month and insurance is $3000 per month. What is the contribution margin?

Question 6 options:

1) 200

2) 300

3) 500

4) 250

Solution

Contribution Margin refers to the total amount that can be used to pay for fixed costs and further generate profits

It can be calculated using the formula,

= Selling Price - Variable Costs

= $500 - $300

=$200

Hence, answer is1) $200

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