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In a case study, a company has total sales of $50,000 and total variable costs o
In a case study, a company has total sales of $50,000 and total variable costs of $30,000. What is the contribution margin?
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Q1
In a case study, a company has total sales of $50,000 and total variable costs of $30,000. What is the contribution margin?
$20,000
$30,000
$50,000
$10,000
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Contribution margin is calculated as Sales Revenue ($50,000) minus Variable Costs ($30,000), which equals $20,000.
Questions & Step-by-step Solutions
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Q
Q: In a case study, a company has total sales of $50,000 and total variable costs of $30,000. What is the contribution margin?
Solution:
Contribution margin is calculated as Sales Revenue ($50,000) minus Variable Costs ($30,000), which equals $20,000.
Steps: 6
Show Steps
Step 1: Identify the total sales amount, which is $50,000.
Step 2: Identify the total variable costs, which is $30,000.
Step 3: Use the formula for contribution margin: Contribution Margin = Total Sales - Total Variable Costs.
Step 4: Substitute the values into the formula: Contribution Margin = $50,000 - $30,000.
Step 5: Calculate the result: $50,000 - $30,000 = $20,000.
Step 6: The contribution margin is $20,000.
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