Question

Hinge Manufacturing's cost of goods sold is $420,000 variable and $240,000 fixed. Thecompany's selling and administrative expenses are $300,000 variable and $360,000fixed. If the company's sales is $1,680,000, what is its contribution margin?

Answer 1

Hi-nge Manufacturing's contribution margin is calculated by subtracting the total variable costs ($720,000) from the sales ($1,680,000), resulting in a contribution margin of $960,000.

Step-by-step explanation:

Contribution Margin Calculation

To calculate the contribution margin, one must subtract the total variable costs from the sales revenue. In this case, Hi-nge Manufacturing's variable costs are the sum of variable cost of goods sold and variable selling and administrative expenses, which are $420,000 and $300,000 respectively. Therefore, the total variable cost is $420,000 + $300,000 = $720,000.

The company's sales are given as $1,680,000. Subtracting the total variable costs from the sales, we get:

Sales - Total Variable Costs = Contribution Margin

$1,680,000 - $720,000 = $960,000 contribution margin.

This figure is crucial for the company as it indicates how much revenue is available to cover fixed costs and contribute to profit.

Answer 2

Contribution margin= $960,000

Step-by-step explanation:

Giving the following information:

Hinge Manufacturing's:

Cost of goods sold variable= $420,000

Cost of goods sold fixed= $240,000

The company's selling and administrative expenses are $300,000

variable and $360,000fixed.

If the company's sales are $1,680,000

Sales= 1680000

Variable cost of goods sold= 420000

Variable selling and administrative expenses=300000

Contribution margin= $960,000