R&G sells lighting fixtures to homeowners,government institutions and commercial buyers.Its sales force is organizing according to customer.The following is a profit and loss statement for each division using the full-cost approach:
-Calculate the contribution for the homeowners division,if R&G had used the contribution-margin approach?

Question

R&G sells lighting fixtures to homeowners,government institutions and commercial buyers.Its sales force is organizing according to customer.The following is a profit and loss statement for each division using the full-cost approach: 
-Calculate the contribution for the homeowners division,if R&G had used the contribution-margin approach?

Quizplus · Accepted Answer

The contribution-margin approach only considers variable costs and ignores fixed costs. From the profit and loss statement for the homeowners division, the variable costs are $20,000 and the sales revenue is $50,000, which would give a contribution margin of $30,000 ($50,000 - $20,000). Therefore, the correct answer is C.

R&G Sells Lighting Fixtures to Homeowners,government Institutions and Commercial Buyers