Lasseter Corporation has provided its contribution format income statement for August. The company produces and sells a single product.

Sales (3,800 units) $ 95,000
Variable expenses 38,000
Contribution margin 57,000
Fixed expenses 43,600
Net operating income $ 13,400

If the company sells 3,900 units, its total contribution margin should be closest to:

a.$13,753
b.$57,000
c.$58,500
d.$59,500

c.$58,500

Explanation:

Contribution margin is the net of sale amount and variable cost. It is the amount of return available to recover the fixed cost and make profit from after that for the business.

Price = $95,000 / 3,800 = $25 per unit

Contribution per unit = $57,000 / 3,800 = $15

Contribution Margin of 3,900 units = 3,900 x $15

Contribution Margin of 3,900 units = $58,500

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