
Concept Introduction:
Contribution Margin: Contribution margin can be defined as the difference between sales and variable costs. The portion i.e. left after deducting variable costs of the product from the sales, it is termed as contribution margin.
To compute:
Contribution Margin (in $ millions)

Answer to Problem 17QS
Solution:
Contribution Margin (in $ millions) = $ 36,176.75 million
Explanation of Solution
The contribution margin (in $ millions) Will be calculated as under −
Given,
- Total Cost of sales = $ 105,431 million
- Total selling and administrative expenses = $ 15,500 million
- Percent of cost of sales as variable = 75 %
- Percent of total selling and administrative expenses as variable = 75 % First, the variable portion and fixed portion of each cost will be calculated −
The variable and fixed portion of total selling and administrative expenses will be calculated as under −
The total variable cost will be calculated as −
The contribution margin will be calculated as under −
Thus, the contribution margin (in dollars) has been calculated.
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