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Calculate increase or decrease in total contribution margin

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Reference no: EM131800425

Gyro Company manufactures Products T and W and is operating at full capacity. To manufacture Product W requires three times the number of machine hours required for Product T. Market research indicates that 1,000 additional units of Product W could be sold. The contribution margin by unit of product is as follows:

Product T Product W

Sales price $300 $325

Variable cost of goods sold 235 250

Manufacturing Margin $65 $75

Variable Selling & admin. exp. 25 10

Contribution Margin $40 $65

Calculate the increase or decrease in total contribution margin if 1,000 additional units of Product W are produced and sold.

Reference no: EM131800425

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