Question

Green Corporation has total sales revenues of $400,000. If its total fixed costs are $70,000 and its total variable costs are $180,000, the contribution margin is Group of answer choices $330,000. $250,000. $550,000. $220,000. Flag question: Question 11 Question 1110 pts Frost Company has a contribution margin per unit of $49. If 10,000 more items are sold, and fixed expenses remain the same, the net change in operating income will be Group of answer choices $343,000. ($343,000). $490,000. $7,000. Flag question: Question 12 Question 1210 pts 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 $1,400 a month rent for his store, and also pays $3,000 a month to his staff in addition to the commissions. Stanley sold 200 bicycles in June. If Stanley prepares a contribution margin income statement for the month of June, what would be his contribution margin

Answer 1

Green Corporation's contribution margin is $220,000. Frost Company will see a $490,000 increase in operating income with 10,000 more units sold. Stanley's Bicycles' contribution margin would be $150,000 for June.

Step-by-step explanation:

The contribution margin is calculated by subtracting total variable costs from total sales revenues. For Green Corporation, with total sales of $400,000 and variable costs of $180,000, the contribution margin is $220,000 ($400,000 - $180,000). This margin contributes towards covering the fixed costs and generating profit. If Frost Company's contribution margin per unit is $49, then selling 10,000 more items increases the operating income by $490,000 ($49 × 10,000). Stanley's Bicycles, after accounting for the sales commission of 15%, would have a contribution margin of $150,000 for the month of June (200 units sold at $750 each, less the commissions and variable costs).

Answer 2

Part 1

the contribution margin is $220,000

Part 2

the net change in operating income is $270,000

Part 3

Stanley's Bicycles contribution margin is $7,500

Step-by-step explanation:

Green Corporation Contribution Margin Statement

Sales revenues $400,000

Less Variable costs ($180,000)

Contribution $220,000

Less Fixed Cost ($70,000)

Net Income $150,000

Frost Company Contribution Margin Statement

Contribution ($49 x 10,000) $490,000

Less Fixed Cost ($70,000)

Net Income $420,000

Change = $420,000 - $150,000 = $270,000

Stanley's Bicycles Contribution Margin Statement

Sales Revenue ($750 x 200) $150,000

Less Variable Costs :

Cost of Sales ( $600 x 200) ($120,000)

Commission ($150,000 x 15%) ($22,500)

Contribution $7,500

Less Fixed Costs

Rent expense ($1,400)

Salaries ($3,000)

Net Income $3,100