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Contribution margin

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Solo Company is a small merchandising firm. During the next month, the company expects to sell 500 units. The company has the following revenue and cost structure:

Selling price per unit 60
Cost per unit 15
Sales commission 10% of sales
Advertising expense 5,000 per month
Administrative expense 3,000 per month plus 20% of sales

Reference: 5-11

The expected contribution margin next month is:

13,500
7,300
5,500
22,500

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This provide the steps to compute the Contribution margin

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