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In a case study, a company sells a product for $50, with variable costs of $30 a
In a case study, a company sells a product for $50, with variable costs of $30 and fixed costs of $10, what is the contribution margin?
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In a case study, a company sells a product for $50, with variable costs of $30 and fixed costs of $10, what is the contribution margin?
$10
$20
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$40
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Contribution margin is calculated as selling price minus variable costs, which is $50 - $30 = $20.
Questions & Step-by-step Solutions
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Q
Q: In a case study, a company sells a product for $50, with variable costs of $30 and fixed costs of $10, what is the contribution margin?
Solution:
Contribution margin is calculated as selling price minus variable costs, which is $50 - $30 = $20.
Steps: 6
Show Steps
Step 1: Identify the selling price of the product, which is $50.
Step 2: Identify the variable costs associated with the product, which are $30.
Step 3: Use the formula for contribution margin: Contribution Margin = Selling Price - Variable Costs.
Step 4: Substitute the values into the formula: Contribution Margin = $50 - $30.
Step 5: Calculate the result: $50 - $30 = $20.
Step 6: The contribution margin is $20.
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