Question

Stanley's Bicycles store buys bicycles on average for $600 and sells them on average for $750. He pays a sales commission of 15% of sales revenue to his sales staff. Stanley pays $1900 a month rent for his store, and also pays $5000 a month to his staff in addition to the commissions. Stanley sold 110 bicycles in June. If Stanley prepares a contribution margin income statement for the month of June, what would be his contribution margin?

Answer 1

Contribution margin= $4,125

Unitary contribution margin = $37.5

Step-by-step explanation:

Giving the following information:

Stanley's Bicycles store buys bicycles on average for $600 and sells them on average for $750. He pays a sales commission of 15% of sales revenue to his sales staff. Stanley pays $1900 a month rent for his store and also pays $5000 a month to his staff in addition to the commissions. Stanley sold 110 bicycles in June.

Sales= 750*110= $82,500

Variable cost= [600 + (0.15*750)]*110= $78,375 (-)

Contribution margin= $4,125

Unitary contribution margin = 750 - 712.5= $37.5