If total variable costs are $748,000,what is the company's contribution margin for this year?
A) $120,000.
B) $158,000.
C) $252,000.
D) $300,000.

Question

Quizplus · Accepted Answer

Contribution margin = Total revenue - Total variable costs.
The question does not provide the total revenue figure, so we cannot calculate the contribution margin in absolute dollars. However, we can use the contribution margin ratio to calculate the relative contribution margin:
Contribution margin ratio = (Total revenue - Total variable costs) / Total revenue
Since the question does not provide a contribution margin ratio either, we would need to assume one. For example, if the contribution margin ratio was 33%, we could calculate the contribution margin as follows:
Contribution margin ratio = 33% = 0.33
Total revenue = Contribution margin / contribution margin ratio = $252,000 / 0.33 = $763,636.36
Contribution margin = Total revenue - Total variable costs = $763,636.36 - $748,000 = $15,636.36.
Therefore, the answer is C) $252,000.

If Total Variable Costs Are $748,000,what Is the Company's Contribution