Tally Corp. sells softwares during the recruiting seasons. During the current year, 12 comma 000 softwares were sold resulting in $ 470 comma 000 of sales revenue, $ 130 comma 000 of variable costs, and $ 52 comma 000 of fixed costs. Contribution margin per software is . A. $ 34.83 B. $ 28.33 C. $ 39.17 D. $ 10.83

The correct option is B $28.33 contribution margin per software

Explanation:

Contribution margin per software is calculated by deducting variable cost per unit from sales price per unit.

This implies how much each unit of software sold contributed to Tally Corp's total fixed costs of $52000 during the period.

Kindly find detailed computation in the attached spreadsheet.

B. $ 28.33

Explanation:

the contribution margin is the amount of revenue remaining to afford the fixed cost and make a gain after paying the entire variable cost wther they are manufacturing, selling or administrative.

sales 470,000 - 130,000 variable cost = 340,000 contribution

contribution / sales = contribution margin

340,000 / 470,000 =  0,7234

The contribution margin express as a ratio represent the cent we keep for each dollar of sale.

We now determinate the sale price per software:

470,000 / 12,000 = 39,17

and calcualte the margin:

39,17 x 0.7234 = 28,335578‬ = $28.33

after variable ost, each unit generates $28.33 dollar of contribution

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