Question

Helga's Pretzels sells pretzels for $8. The variable costs for each pretzel are $1, while the total fixed costs are $1000. The contribution margin for 1900 pretzels is

		$8000.
		$1000.
		$14,200.
		$13,300.

Answer 1

contribution margin per unit = Selling price per unit -variable cost per unit

= $ 8 - $ 1

= $ 7

The contribution margin for 1900 pretzels = contribution margin per unit * Units

= $ 7 * 1900 units

= $ 13,300

Hence the correct answer is $ 13,300