Answer (B) is correct . Contribution margin is defined as total revenue minus variable costs. Total revenue for two units is $180 (2 × $90 marginal revenue), and total variable costs are $140 (2 × $70 unit cost). The total contribution margin is $40 ($180 – $140).
Answer (A) is incorrect because The contribution margin equals the total revenue $180 (2 ¡Á $90) minus the variable costs $140 (2 ¡Á $70).
Answer (C) is incorrect because The contribution margin equals the total revenue $180 (2 ¡Á $90) minus the variable costs $140 (2 ¡Á $70).
Answer (D) is incorrect because The contribution margin equals the total revenue $180 (2 ¡Á $90) minus the variable costs $140 (2 ¡Á $70 |
If two units of product were produced and sold, the total contribution margin would be
