Change in Total Contribution Margin

Steps:

• Calculate June contribution per unit: $80,000 / 50,000 units =$1.60.
• July units: 50,000 × 0.90 = 45,000; July contribution per unit: $1.60 × 0.95 =$1.52.
• July total contribution: 45,000 × $1.52 =$68,400.
• Difference in coverage: $80,000 -$68,400 = $11,600 less in July.

Why C is correct:

• Total contribution margin directly measures fixed cost coverage; the $11,600 decline matches the formula for changed volume and per-unit contribution.

Why the others are wrong:

• A: Ignores contribution per unit decline, using only volume change ($80,000 × 0.90 -$80,000 = -$8,000).
• B: Equals June fixed costs, unrelated to July changes.
• D: Overstates decline by misapplying percentages (e.g., 10% + 5% = 15% on total).

Final answer: C