Question

Schrute Farm Sales buys portable generators for $ 480 and sells them for $ 770. He pays a sales commission of​ 5% of sales revenue to his sales staff. Mr. Schrute pays $ 7 comma 000 a month rent for his​ store, and also pays $ 1 comma 700 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:

The answer is $210,750.

Explanation:

To calculate the contribution margin, we need to find the total income from the sales and then subtract all costs. If Mr. Schrute sold 300 generators for $770 each, then the total sales will be $231,000. The 5% commission from $231,000 will be $11,550. The total costs along with the rent and salary is $20,250. So the contribution margin in the contribution margin income statement will be $210,750.

I hope this answer helps.