Answer:
$252,000
Explanation:
The question is to determine the contribution of Sam's Bookstore for the first quarter
Contribution Margin represents the profit an organisation can generate from the sale of a product. in order to calculate, the variable costs are deducted from the revenue from sale.
The formula for Contribution margin = Sales- the cost of goods sold - variable selling expense.
Selling Price = $65
Reported ales = $910,000
First, we determine the number of books sold in the first quarter
= $910 000/ $65 = 14 000 books
Second, since the store sold 14,000 books in the first quarter, the total variable selling cost for the books sold
= total books sold x the variable selling expense per book
= 14,000 x $4 = $56,000= total variable selling expense
Third, since the store sold 14,000 books in the first quarter, the total variable administrative cost for the books sold
= total books sold x the variable administrative expense per book
= 14,000 x $3 = $42,000= total variable Administrative expense
Four, determine the contribution margin as follows:
Sales - cost of goods sold - variable selling expense - variable administrative expense
= $910,000-$560,000- $56,000-$42,000= $252,000
