At a sales level of $100,000, Bonita's Baskets' gross margin of $55,000 is $20,000 less than its contribution margin. If its operating income is $25,000, and total SG&A expenses are $30,000, what are the variable and fixed costs for Bonita's Baskets?
A) Variable,$25,000 and Fixed, $50,000
B) Variable,$50,000 and Fixed, $25,000
C) Variable,$35,000 and Fixed, $40,000
D) Variable,$40,000 and Fixed, $35,000

Question

Quizplus · Accepted Answer

Contribution Margin = Gross Margin, $55,000 + $20,000 = $75,000; Variable Costs = Sales - Contribution Margin = $100,000 - $75,000 = $25,000; Fixed Costs = Contribution Margin - Operating Income = $75,000 - $25,000 = $50,000.

At a Sales Level of $100,000, Bonita's Baskets' Gross Margin