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?
$20,000
$30,000
$50,000
$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.
