ABC Inc. manufactures and sells toys. Price and cost data are as follows:

Selling price per unit (package of 2 CDs)......................................	$20.00
Variable costs per unit:
Direct material...............................................................................................................	$4.00
Direct labor......................................................................................................................	$5.00
Artist's royalties..............................................................................................................	$3.50
Manufacturing overhead..........................................................................................	$3.00
Selling expenses............................................................................................................	$1.00
Total variable costs per unit............................................................	$16.50
Annual fixed costs:
Manufacturing overhead..........................................................................................	$180,000
Selling and administrative.......................................................................................	$220,000
Total fixed costs................................................................................	$400,000
Forecasted annual sales volume (120,000 units).........................	$2,400,000

What is ABC Inc.'s contribution margin (CM)?

Select one:

a. 400,000

b. 540,000

c. 600,000

d. 420,000