Calculation of total contribution margin and variable costs analysis
1. Iacono Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $127.20 per unit.
The best estimate of the total contribution margin when 5,300 units are sold is:
a. $32,330
b. $230,020
c. $51,410
d. $146,810
2. Shipping cost at Junk Food Imports is a mixed cost with variable and fixed components. Past records indicate total shipping cost was $18,000 for 16,000 pounds shipped and $22,500 for 22,000 pounds shipped. Assuming that this activity is within the relevant range, if the company plans to ship 18,000 pounds next month, the expected shipping cost is:
a. $18,500
b. $20,400
c. $19,500
d. $24,000