Question

For Sunland Company, sales is $2600000, fixed expenses are $780000, and the contribution margin ratio is 36%. What are the total variable expenses? $499200 $2600000 $1664000 $936000

Answer 1

$1,664,000

Step-by-step explanation:

Given the following;

Sales = $2,600,000

Since we are given contribution margin ratio to be 36%,

We will use the formula for contribution margin ratio as depicted below to arrive at the total variable expenses.

Contribution margin ratio = Sales - Variable ) ÷ sales

36% = ( $2,600,000 - Variable expenses ) ÷ $2,600,000

Cross multiply

36% × $2,600,000 = $2,600,000 - Variable expenses

$936,000 = $2,600,000 - Variable expenses.

Collect like terms

Variable expenses = $2,600,000 - $936,000

Variable expenses = $1,664,000