Question

Restate the following income statement for a retailer in contribution format. $ 93,000 53,940 39,060 Sales revenue ($100 per unit) Less cost of goods sold ($58 per unit) Gross margin Less operating costs: Commissions expense ($7 per unit) $ 6,510 Salaries expense 7,900 Advertising expense 6,000 Shipping expense ($3 per unit) 2,790 Operating income 23,200 $ 15,860

Need help finding Total Variable Expense and Contribution Margin. Please explain how to find, Thank you!

Answer 1

You have to add all variable expenses to get total variable expenses. To get contribution margin, need to deduct total variable expenses from sales revenue.

Sales revenue		$   93,000	$   100
Variable expenses
Cost of goods sold	$   53,940		$     58
Commission expenses	$     6,510		$       7
Shipping expenses	$     2,790		$       3
Total variable expenses		$   63,240	$     68
Contribution margin		$   29,760	$     32
Fixed expenses
Salaries expense	$     7,900
Advertising expense	$     6,000
Total fixed expense		$   13,900
Operating income		$   15,860

You can reach me over comment box if you have any doubts. Please rate this answer