Sugartown Corporation has total sales revenues of $225,000.If their total fixed costs are $40,000 and their total variable costs are $65,000,then the total contribution margin is:

Question

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The contribution margin can be calculated by subtracting the total variable costs from the total revenue. Therefore, the contribution margin for Sugartown Corporation is $225,000 - $65,000 = $160,000. Option A is incorrect because it calculates the gross profit, which includes the cost of goods sold. Option B is incorrect because it only considers the variable costs, not the total contribution. Option D is incorrect because operating income also takes into account other expenses, such as selling and administrative costs, which are not given in the problem.

Sugartown Corporation Has Total Sales Revenues of $225,000