Consider the scenario below:A TV manufacturer and seller sold 50 units for a total of P3,750,000 worth of television sets for the month of August 2018. Fixed Expenses at P1,000,000 and Variable Expenses at P888,000.Compute for the total Contribution Margin.Select one:a.2,268,000b.2,862,000c.2,682,000d.2,286,000
Question
Consider the scenario below:A TV manufacturer and seller sold 50 units for a total of P3,750,000 worth of television sets for the month of August 2018. Fixed Expenses at P1,000,000 and Variable Expenses at P888,000.Compute for the total Contribution Margin.Select one:a.2,268,000b.2,862,000c.2,682,000d.2,286,000
Solution
To compute for the total Contribution Margin, you need to follow these steps:
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Compute for the total revenue. In this case, the total revenue is P3,750,000 which is the total worth of television sets sold.
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Compute for the total variable costs. In this case, the total variable costs is P888,000.
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Subtract the total variable costs from the total revenue to get the Contribution Margin.
So, P3,750,000 (total revenue) - P888,000 (total variable costs) = P2,862,000
Therefore, the total Contribution Margin is P2,862,000.
So, the correct answer is b. 2,862,000.
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