Answer:
total contribution margin= $144,160
Explanation:
First, we need to calculate the unitary variable cost of sales:
Cost of sales= 419,000/5,000= $83.8
Cost of sales= 502,800/6,000= $83.8
It is all variable.
Now, to estimate the variable component of selling and administrative, we will use the high-low method:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (202,200 - 186,000) / (6,000 - 5,000)
Variable cost per unit= $16.2
Finally, the total contribution margin:
total contribution margin= number of units*unitary contribution margin
total contribution margin= 5,300*(127.2 - 83.8 - 16.2)
total contribution margin= 5,300*27.2
total contribution margin= $144,160
