Answer:
b. $398,560
Explanation:
Total cost at the activity level of 5,000 units = Cost of sales + Selling & Administrative cost = $265,500 + $393,500 = $659,000
Total cost at activity level of 6,000 units = Cost of sales + Selling & Administrative Cost = $318,600 + $406,800 = $725,400
Variable cost per unit = [tex]\frac{Change\ in\ total\ cost}{Change\ in\ quantity}[/tex] = [tex]\frac{725,400 - 659,000}{6,000 - 5,000} = \frac{66,400}{1,000} = 66.40[/tex]
Contribution margin per unit = Selling price - Variable cost = $141.60 - $66.40 = $75.20
Therefore, contribution margin for 5,300 units = $75.20 [tex]\times[/tex] 5,300 = $398,560
