Schrute Farm Sales buys portable generators for $450 and sells them for $720.He pays a sales commission of 5% of sales revenue to his sales staff.Mr.Schrute pays $2,000 a month rent for his store,and also pays $1,700 a month to his staff in addition to the commissions.Mr.Schrute sold 200 generators in June.If Mr.Schrute prepares a contribution margin income statement for the month of June,what would be his operating income?

Question

Quizplus · Accepted Answer

D)
Sales $720 × 200 = $144,000
Less: Variable costs $450 × 200 = $ 90,000
Commission $144,000 × 5% = $ 7,200
Contribution Margin $ 46,800
Rent $ 2,000
Salaries $ 1,700
Operating Income $ 43,100

Schrute Farm Sales Buys Portable Generators for $450 and Sells