ABC Company's total sales volume is $10 million,with a cost of goods sold equal to 50% of sales,and total indirect expenses of $2 million.The Eastern territory has sales volume that equals $1 million and direct expenses of $200,000.In a marketing cost analysis,the contribution margin of the Eastern territory is:

Question

Quizplus · Accepted Answer

The contribution margin is calculated as sales minus variable costs. For the Eastern territory, sales are $1 million, and the cost of goods sold (variable cost) is 50% of sales, which is $500,000. Subtracting the direct expenses of $200,000 from the remaining $500,000 gives a contribution margin of $300,000.

ABC Company's Total Sales Volume Is $10 Million,with a Cost