For Franklin, Inc., sales is $2,000,000, fixed expenses are $600,000, and the contribution margin ratio is 36%. What are the total variable expenses?
A) $384,000
B) $720,000
C) $1,280,000
D) $2,000,000

Question

Quizplus · Accepted Answer

The total variable expenses can be calculated by first determining the total contribution margin, which is the sales multiplied by the contribution margin ratio (36%). So, $2,000,000 * 36% = $720,000. Then, subtract the total contribution margin from the total sales to find the total variable expenses: $2,000,000 - $720,000 = $1,280,000.