Question

If a firm's sales are $250,000 and its variable costs are $190,000, the contribution margin in dollars is:_______.
a. $440,000
b. $60,000
c. $190,000
d. $250,000

Answer 1

Answer:

b. $60,000

Explanation:

Given the following data;

Sales price = $250,000

Variable cost = $190,000

Contribution margin can be defined as the subtraction of variable cost from the sales price.

Mathematically, it given by the formula;

$Contribution \; margin = sales \; price - variable \;cost$

$Contribution \; margin = 250000 - 190000$

Contribution margin = 60,000

Therefore, the contribution margin in dollars is $60,000.