If a company has a contribution margin of $15,000 and fixed costs of $10,000, wh
Practice Questions
Q1
If a company has a contribution margin of $15,000 and fixed costs of $10,000, what is the net profit?
$5,000
$15,000
$10,000
$0
Questions & Step-by-Step Solutions
If a company has a contribution margin of $15,000 and fixed costs of $10,000, what is the net profit?
Step 1: Identify the contribution margin, which is given as $15,000.
Step 2: Identify the fixed costs, which are given as $10,000.
Step 3: Use the formula for net profit: Net Profit = Contribution Margin - Fixed Costs.
Step 4: Substitute the values into the formula: Net Profit = $15,000 - $10,000.
Step 5: Calculate the result: $15,000 - $10,000 = $5,000.
Step 6: Conclude that the net profit is $5,000.
Contribution Margin – The amount remaining from sales revenue after variable costs have been deducted, which contributes to covering fixed costs and generating profit.
Fixed Costs – Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.
Net Profit – The amount of money that remains after all costs, including fixed and variable costs, have been subtracted from total revenue.
Soulshift Feedback×
On a scale of 0–10, how likely are you to recommend
The Soulshift Academy?
