The Gasson Company sells three products, Product A, Product B and Product C, and had sales of £1,000,000 during the month of June. The company's overall contribution margin ratio was 37% and fixed expenses totaled £350,000. Sales were: Product A, £500,000; Product B, £300,000; and Product C, £200,000. Traceable fixed costs were: Product A, £120,000; Product B, £100,000; and Product C, £60,000. The variable expenses of Product A were £300,000 and the variable expenses of Product B were £180,000.
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The contribution margin in pounds for Product B for June was
A)£20,000.
B)£111,000.
C)£120,000.
D)£200,000.

Question

Quizplus · Accepted Answer

The contribution margin for Product B is calculated as Sales minus Variable Expenses. For Product B, Sales are £300,000 and Variable Expenses are £180,000, so the Contribution Margin is £300,000 - £180,000 = £120,000.

The Gasson Company Sells Three Products, Product A, Product B