Digby Corp. ended the year carrying $14,161,000 worth of inventory. Had they sold their entire inventory at their current prices, how many more dollars of contribution margin would it have brought to Digby Corp.?
Answers
Answer:
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$14,161,000
Given:
Digby Corp. ended the year carrying $14,161,000 worth of inventory.
To find:
Had they sold their entire inventory at their current prices, how many more dollars of contribution margin would it have brought to Digby Corp.?
Solution:
Contribution margin is the amount of revenue from the activity less variable costs, and it shows how much money is still available for the company to cover fixed costs.
Inventory is priced at its market value, which is the same as its worth. Therefore, the amount of income generated when the inventories are sold at the current prices will be equal to the inventories' $7,364,000 value.
Hence,$14,161,000 more dollars of contribution margin would have been brought to Digby Corp.
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