Answer:
Part 1
the contribution margin is $220,000
Part 2
the net change in operating income is $270,000
Part 3
Stanley's Bicycles contribution margin is $7,500
Explanation:
Green Corporation Contribution Margin Statement
Sales revenues $400,000
Less Variable costs ($180,000)
Contribution $220,000
Less Fixed Cost ($70,000)
Net Income $150,000
Frost Company Contribution Margin Statement
Contribution ($49 x 10,000) $490,000
Less Fixed Cost ($70,000)
Net Income $420,000
Change = $420,000 - $150,000 = $270,000
Stanley's Bicycles Contribution Margin Statement
Sales Revenue ($750 x 200) $150,000
Less Variable Costs :
Cost of Sales ( $600 x 200) ($120,000)
Commission ($150,000 x 15%) ($22,500)
Contribution $7,500
Less Fixed Costs
Rent expense ($1,400)
Salaries ($3,000)
Net Income $3,100
