Reference: 19_05
Red and White Company Reported the Following Monthly

question 88

Multiple Choice

Reference: 19_05
Red and White Company reported the following monthly data:
$\begin{array}{ll}\text { Units produced } & 2,000 \text { units } \\\text { Sales price } & \$ 25 \text { per unit } \\\text { Direct materials } & \$ 1 \text { per unit } \\\text { Direct labor } & \$ 2 \text { per unit } \\\text { Variable overhead } & \$ 3 \text { per unit } \\\text { Fixed overhead } & \$ 8,000 \text { in total }\end{array}$

-What is the Red and White's contribution margin for this month if 980 units were sold?

• A) $38,000
• B) $18,620
• C) $24,500
• D) $50,000
• E) $21,560

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Definitions:

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been deducted from total revenue.

Present Value Factor

A factor used in the calculation of the present value of cash flows, based on a specific rate and number of periods.

Net Present Value

A financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time.

Present Value Index

The Present Value Index is a financial metric used to evaluate the viability of a project or investment by comparing its present value of future cash flows to the initial investment.