Roller Corp sells wagon wheels for $150.. The variable costs for each wheel are $85, while the total fixed costs are $60,000. The contribution margin for 500 wheels is:<\/p>\n\n\n\n
A) $75,000.<\/p>\n\n\n\n
B) $32,500.<\/p>\n\n\n\n
C) $42,500.<\/p>\n\n\n\n
D) $10,000.<\/p>\n\n\n\n
The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n To calculate the contribution margin<\/strong> for 500 wheels, we first need to understand the formula for contribution margin:<\/p>\n\n\n\n [ Then, the total contribution margin<\/strong> is:<\/p>\n\n\n\n [ From the problem, we know the following:<\/p>\n\n\n\n Now, calculate the contribution margin per unit<\/strong>:<\/p>\n\n\n\n [ Next, we multiply the contribution margin per unit<\/strong> by the number of units sold (500 wheels):<\/p>\n\n\n\n [ The total contribution margin<\/strong> for 500 wheels is $32,500<\/strong>.<\/p>\n\n\n\n Thus, the correct answer is B) $32,500<\/strong>.<\/p>\n\n\n\n The contribution margin<\/strong> is an important metric in cost-volume-profit (CVP) analysis, as it represents the amount of money available after covering variable costs to contribute towards covering fixed costs and generating profit. By subtracting the variable cost from the selling price, you determine how much each unit contributes to covering the fixed costs. Once you calculate the contribution margin per unit, multiplying it by the total number of units gives the total contribution margin. In this case, Roller Corp\u2019s contribution margin for 500 wheels is $32,500<\/strong>, meaning after covering the variable costs for those wheels, $32,500 is available to cover the fixed costs and contribute to profit.<\/p>\n","protected":false},"excerpt":{"rendered":" Roller Corp sells wagon wheels for $150.. The variable costs for each wheel are $85, while the total fixed costs are $60,000. The contribution margin for 500 wheels is: A) $75,000. B) $32,500. C) $42,500. D) $10,000. The correct answer and explanation is : To calculate the contribution margin for 500 wheels, we first need […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-201485","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/201485","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=201485"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/201485\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=201485"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=201485"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=201485"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\\text{Contribution Margin per unit} = \\text{Selling Price} – \\text{Variable Cost per unit}
]<\/p>\n\n\n\n
\\text{Total Contribution Margin} = \\text{Contribution Margin per unit} \\times \\text{Number of units sold}
]<\/p>\n\n\n\nStep 1: Contribution Margin per Unit<\/h3>\n\n\n\n
\n
\\text{Contribution Margin per unit} = 150 – 85 = 65
]<\/p>\n\n\n\nStep 2: Total Contribution Margin for 500 Wheels<\/h3>\n\n\n\n
\\text{Total Contribution Margin} = 65 \\times 500 = 32,500
]<\/p>\n\n\n\nConclusion:<\/h3>\n\n\n\n
Explanation:<\/h3>\n\n\n\n