Question

Schrute Farm Sales buys portable generators for $460 and sells them for $750. He pays a sales commission of 5% of sales revenue to his sales staff. Mr. Schrute pays $7000 a month rent for his store, and also pays $1800 a month to his staff in addition to the commissions. Mr. Schrute sold 300 generators in June. If Mr. Schrute prepares a contribution margin income statement for the month of June, what would be his contribution margin?

Answer 1

Answer:

his contribution margin is $75750

Explanation:

given data

buys = $460

sell = $750

sales commission = 5%

store rent = $7000

pay for staff = $1800

to find out

what would be his contribution margin

solution

contribution margin is express as

contribution margin = sales - sales commission - cost of good sold    .........1

put here value

contribution margin = 300 × 750 - ( 300 × 750) 5%  - 300 × 460

contribution margin = 75750

so his contribution margin is $75750