Question

The following information is provided for Southall Company: Sales revenue $292,000 Variable manufacturing costs 99,000 Fixed manufacturing costs 61,000 Variable selling and administrative costs 44,000 Fixed selling and administrative costs 39,000 What is this company's contribution margin?

Answer 1

contribution margin 149,000

contribution margin ratio 73.76%

Step-by-step explanation:

`Sales \: Revenue - Variable \: Cost = Contribution \: Margin`

sales revenue 292,000

variable cost 99,000

variable selling 44,000

contribution margin 149,000

The variable S&A cost are part of the variable cost, so they are deducted from the sales revenue to obtain the contribution margin

`(Contribution \: Margin)/(Sales \: Revenue) = Contribution \: Margin \: Ratio`

149,000/292,000 = .737624 = 73.76%