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O Contribution margin is calculated by subtracting: Total variable costs from total revenues Cost of goods sold from total revenues Fixed costs from total

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O Contribution margin is calculated by subtracting: Total variable costs from total revenues Cost of goods sold from total revenues Fixed costs from total revenues Total manufacturing costs from total revenues Question 12 (4 points) Listen Black Horse Corporation manufactures a product with the following full unit costs at a volume of 2,000 units: Direct materials Direct labor Manufacturing overhead (30% variable) Selling expenses (50% variable) Administrative expenses (10% variable) Total per unit $100 40 75 25 40 $280 A company recently approached Black Horse's management with an offer to purchase 225 units for $275 each. Black Horse currently sells the product to dealers for $400 each. Black Horse's capacity is sufficient to produce the extra 225 units. No selling expenses would be incurred on the special order. If Black Horse's management accepts the offer, profits will: Increase by $24,412.50 Decrease by $60,000 Increase by $33,400 Decrease by $24,412.50

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