Question

Number of units sold 20,000 Selling price per unit $ 30 Variable selling expense per unit $ 3.2 Variable administrative expense per unit $ 2.7 Fixed administrative expenses $ 50,000 Beginning merchandise inventory $ 24,000 Ending merchandise inventory $ 19,000 Merchandise purchases $ 340,000 What is the contribution margin

Answer 1

Answer: $137,000

Explanation:

Contribution margin = Sales - Variable expenses

Sales (30 * 20,000)                                                                       $600,000

Cost of Goods sold(24,000 + 340,000 - 19,000)                       ($345,000)

Variable selling expense (3.2 * 20,000)                                     ($64,000)

Variable administrative expense (2.7 * 20,000)                         ($54,000)

Contribution margin                                                                      $137,000

Cost of goods sold = Beginning merchandise + Purchases - Ending merchandise