A company produced and sold 100,000 units of a component with a variable cost of $20 per unit. Selling price is $50. 1,200 units are falied the tolerance specification. These 1,200 were reworked at a cost of $12 per unit and sold as factory seconds at $45 each. The increase in the company's contribution margin from this component would have been
A. $14,400
B. $20,400
C. $21,600
D. $39,600
I don't undertand, for me is letter D. (45-12)x1,200. The correct answers is letter A.