What is the contribution margin for the flexible budget

ACCOUNTING

Multiple Choice

Ceylon Tea Products has an exclusive contract with British Distributors. Calamine and Ceylon are two brands of teas that are imported and sold to retail outlets. The following information is provided for the month of March:


Actual Budget

Calamine Ceylon Calamine Ceylon

Sales in pounds 1,700 lbs. 1,800 lbs. 2,000 lbs. 1,500 lbs

Price per pound $2.50 $2.50 $2.00 $3.00

Variable cost per pound 1.00 2.00 1.00 1.50

Contribution margin $1.50 $0.50 $1.00 $1.50


Budgeted and actual fixed corporate-sustaining costs are $1,750 and $2,000, respectively.


What is the contribution margin for the flexible budget?

a. $3,750

b. $4,400

c. $4,250

d. $3,450

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