Question

If the net operating income is $10,000, the contribution margin is $40,000, and the variable expenses are $33,000, then what is the sales amount?

1) $43,000
2) $47,000
3) $53,000
4) $73,000

Answer 1

The sales amount is calculated by adding the contribution margin to the variable expenses. With a contribution margin of $40,000 and variable expenses of $33,000, the sales amount is $73,000.

Step-by-step explanation:

To find the sales amount, we need to understand that the sales amount equals the sum of the variable expenses and the contribution margin. The contribution margin is the difference between sales and variable expenses.

We are given the following: net operating income is $10,000, the contribution margin is $40,000, and the variable expenses are $33,000.

The contribution margin is calculated as follows:

Sales - Variable Expenses = Contribution Margin

So, to find Sales:

Sales = Contribution Margin + Variable Expenses

Thus:

Sales = $40,000 (Contribution Margin) + $33,000 (Variable Expenses)

Sales = $73,000