Question

The following information is available for Chap Company.Sales: 350,000Cost of goods sold: 120,000Total fixed expenses: 60,000Total variable expenses: 100,000Which amount would you find on Chap's CVP income statement?A. Contribution margin of $250,000B. Contribution margin of $190,000C. Gross profit of $230,000D. Gross profit of $190,000

Answer 1

Answer:

A. Contribution margin of $250,000 and C. Gross profit of $230,000.

Explanation:

Sales = $350,000

Cost of goods sold = $120,000

Total fixed expenses = $60,000

Total variable expenses = $100,000

Therefore,

Gross profit = Sales - Cost of goods sold

                    = $350,000 - $120,000

                    = $230,000

Contribution margin = Sales - Total variable cost

                                  = $350,000 - $100,000

                                  = $250,000

The right options are A. Contribution margin of $250,000 and C. Gross profit of $230,000.