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A company sells 500 sleds per month for $80. Variable costs are $41 per unit and fixed expenses are $3,500 per month. The company thinks that using a new material would increase sales by 70 units per month. If the new material increases variable costs by $4 per unit, the impact on contribution margin would be a ______.

Sagot :

The impact on contribution margin would be a decrease.

What is a contribution margin?

A contribution margin is the price of an item less the variable cost of the item. Variable cost is the cost that varies with the cost of production .

Contribution margin = selling price - variable cost

Initial contribution margin = $80 - $41 = $39

New contribution margin = $80 - ($41 + $4) = $35

To learn more about variable cost, please check: https://brainly.com/question/26502221

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