Assume the following information for a merchandising company: $ 473,000 $ 25,000 $ 350,000 $ 50,000 $ 40,000 $ 5,000 Sales Variable selling expenses Cost of goods sold Fixed administrative expenses Fixed selling expenses Variable administrative expenses What is the company's contribution margin?
Assume the following information for a merchandising company: $ 473,000 $ 25,000 $ 350,000 $ 50,000 $ 40,000 $ 5,000 Sales Variable selling expenses Cost of goods sold Fixed administrative expenses Fixed selling expenses Variable administrative expenses What is the company's contribution margin?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
![### Company Financial Information Analysis
Assume the following information for a merchandising company:
- **Sales**: $473,000
- **Variable Selling Expenses**: $25,000
- **Cost of Goods Sold (COGS)**: $350,000
- **Fixed Administrative Expenses**: $50,000
- **Fixed Selling Expenses**: $40,000
- **Variable Administrative Expenses**: $5,000
**Question:** What is the company's contribution margin?
#### Multiple Choice Options
- **Option 1**: $93,000
- **Option 2**: $118,000
- **Option 3**: $98,000
- **Option 4**: $123,000
**Explanation**: The contribution margin is calculated by subtracting the total variable expenses from sales. This involves the variable selling expenses, cost of goods sold, and variable administrative expenses. To calculate the contribution margin, use the formula:
\[ \text{Contribution Margin} = \text{Sales} - (\text{Variable Selling Expenses} + \text{COGS} + \text{Variable Administrative Expenses}) \]
Apply the values provided to find the correct option.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3cadaab7-0242-405d-ab75-d1a15c225b30%2F2831ac06-41f9-4243-81ce-ca427d9a19f2%2Fjxdp8jn_processed.png&w=3840&q=75)
Transcribed Image Text:### Company Financial Information Analysis
Assume the following information for a merchandising company:
- **Sales**: $473,000
- **Variable Selling Expenses**: $25,000
- **Cost of Goods Sold (COGS)**: $350,000
- **Fixed Administrative Expenses**: $50,000
- **Fixed Selling Expenses**: $40,000
- **Variable Administrative Expenses**: $5,000
**Question:** What is the company's contribution margin?
#### Multiple Choice Options
- **Option 1**: $93,000
- **Option 2**: $118,000
- **Option 3**: $98,000
- **Option 4**: $123,000
**Explanation**: The contribution margin is calculated by subtracting the total variable expenses from sales. This involves the variable selling expenses, cost of goods sold, and variable administrative expenses. To calculate the contribution margin, use the formula:
\[ \text{Contribution Margin} = \text{Sales} - (\text{Variable Selling Expenses} + \text{COGS} + \text{Variable Administrative Expenses}) \]
Apply the values provided to find the correct option.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education