At a sales level of $300,000, James Company's gross margin is $15,000 less than its contribution margin, its net income is $50,000, and its selling and administrative expenses total $120,000. At this sales level, its contribution margin would be?

Question

Quizplus · Accepted Answer

The contribution margin is calculated by adding the net income and selling and administrative expenses to the gross margin. Since the gross margin is $15,000 less than the contribution margin, we can set up the equation: Contribution Margin = Gross Margin + $15,000. Given that Net Income = $50,000 and Selling & Administrative Expenses = $120,000, we have Contribution Margin = $50,000 + $120,000 + $15,000 = $185,000.

At a Sales Level of $300,000, James Company's Gross Margin