Spartan Systems reported total sales of $300, 000, at a price of $20 and per unit variable expenses of $12, for the sales of their single product. What is the amount of contribution margin if sales volume increases by 30%?

Question

Spartan Systems reported total sales of $300, 000, at a price of $20 and per unit variable expenses of $12, for the sales of their single product.  What is the amount of contribution margin if sales volume increases by 30%?

Quizplus · Accepted Answer

CM ratio = Contribution margin ÷ Sales = $120, 000 ÷ $300, 000 = 0.40
Contribution margin = CM ratio × Sales
Contribution margin = 0.40 × (1.3 × $300, 000)= $156, 000

Spartan Systems Reported Total Sales of $300, 000, at a Price