Question

Hinge manufacturing's cost of goods sold is $420,000 variable and $240,000 fixed. the company's selling and administrative expenses are $300,000 variable and $360,000 fixed. if the company's sales is $1,480,000, what is its contribution margin?

Answer 1

Hi there
contribution margin is defined as revenues minus variable expenses. In other words, the contribution margin reveals how much of a company's revenues will be contributing (after covering the variable expenses) to the company's fixed expenses and net income.
The contribution margin of a manufacturer is the amount of net sales that is in excess of the variable manufacturing costs and the variable SG&A expenses.

So contribution margin equals
Sales-variable manufacturing cost-SG&A expenses
1,480,000−420,000−300,000
=760,000....answer

Hope it helps