Contribution Margin Profit Calculation Steps:

• Last month's fixed costs = (1,000 units × $20/unit) -$12,000 profit = $8,000.
• This month's units sold = 1,000 × 1.20 = 1,200.
• This month's total contribution = 1,200 × ($20 × 1.05) = 1,200 ×$21 = $25,200.
• This month's profit = $25,200 - ($8,000 × 1.15) = $25,200 -$9,200 = $16,000. Why C is correct:
• Matches the formula Profit = (units sold × contribution per unit) - total fixed costs, accounting for all given changes. Why the others are wrong:
• A. $18,000: Overstates profit by double-counting volume and contribution increases without fixed cost adjustment.
• B. $14,800: Understates by applying volume increase to old contribution per unit but new fixed costs.
• D. $17,200: Ignores fixed cost increase, using last month's fixed costs with new contribution total. Final answer: C