Question

Coronado Industries’s cost of goods sold is $500000 variable and $260000 fixed. The company’s selling and administrative expenses are $340000 variable and $380000 fixed. If the company’s sales revenue is $1960000, what is its contribution margin? Select answer from the options below -$1200000 -$1120000 -$480000 -$1320000

Answer 1

The contribution margin for Coronado Industries is $1,120,000, calculated by subtracting the total variable costs ($840,000) from the sales revenue ($1,960,000). There appears to be a mistake in the options provided as they all indicate negative amounts.

Step-by-step explanation:

The question asks about calculating the contribution margin for Coronado Industries. To find the contribution margin, we subtract the total variable costs from the sales revenue. The variable costs include both the cost of goods sold and the variable selling and administrative expenses.

First, we sum up the variable costs: $500,000 (variable COGS) + $340,000 (variable S&A expenses) = $840,000 in total variable costs. Next, we subtract the total variable costs from the sales revenue of $1,960,000:

$1,960,000 (sales revenue) - $840,000 (total variable costs) = $1,120,000.

Thus, the contribution margin for Coronado Industries is $1,120,000. The correct option is -$1,120,000, which is an error in the given options as the contribution margin is a positive figure in this case.