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

Sales (2,900 units) $269,700
Variable Expenses 107,300
Contribution Margin 162,400
Fixed Expenses 137,100
Net Operating Income $25,300

If the company sells 3,100 units, its total contribution margin should be closest to:

a. $27,045
b. $181,000
c. $152.400
d. $173,600

The total contribution margin at 3100 units is closest to $173600 and option d is the correct answer.

Explanation:

The contribution margin is the difference between the Sales and the variable expenses. The contribution margin per unit is the total contribution margin divided by the total number of units or contribution margin expressed in per unit terms.

To calculate the total contribution margin, we first need to calculate the per unit contribution margin and multiply it by 3100 units.

Per unit contribution margin = 162400 / 2900 = $56 per unit

Total contribution margin at 3100 units = 56 * 3100 = $173600

The above entry would decrease stockholders' equity by $10,000 and increase the liabilities by $10,000.

Explanation:

Consultation expense is an expense and when the expense gets debited, it refers to expense being incurred which in turn decreases stockholders' equity. Accounts payable is a liability and crediting accounts payable increases the liability.