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In a case study, a company sells a product for $50, with variable costs of $30 a

Practice Questions

Q1

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
$30
$40

Questions & Step-by-Step Solutions

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?

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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