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If a company has a total sales revenue of $50,000 and total variable costs of $3

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Question: If a company has a total sales revenue of $50,000 and total variable costs of $30,000, what is the total contribution?

Options:

  1. $20,000
  2. $30,000
  3. $50,000
  4. $10,000

Correct Answer: $20,000

Solution: 

Total contribution = Total sales revenue - Total variable costs = $50,000 - $30,000 = $20,000.

If a company has a total sales revenue of $50,000 and total variable costs of $3

Practice Questions

Q1
If a company has a total sales revenue of $50,000 and total variable costs of $30,000, what is the total contribution?
  1. $20,000
  2. $30,000
  3. $50,000
  4. $10,000

Questions & Step-by-Step Solutions

If a company has a total sales revenue of $50,000 and total variable costs of $30,000, what is the total contribution?
  • Step 1: Identify the total sales revenue, which is $50,000.
  • Step 2: Identify the total variable costs, which is $30,000.
  • Step 3: Use the formula for total contribution: Total contribution = Total sales revenue - Total variable costs.
  • Step 4: Substitute the values into the formula: Total contribution = $50,000 - $30,000.
  • Step 5: Calculate the result: $50,000 - $30,000 = $20,000.
  • Step 6: The total contribution is $20,000.
  • Contribution Margin – The contribution margin is the difference between total sales revenue and total variable costs, indicating how much revenue is available to cover fixed costs and generate profit.
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