BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
Question
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Compute the conttribution margin for David 18 Factory if the following data is given:Variable Selling and distribution 24 500Cost of good sold (COGS)RM197 500Sales 15 000 unitSales price Rm18

Rm48 000


Rm48 500


Rm97 000


Rm97 500

Explanation:
Detailed explanation1: The contribution margin is sales minus variable costs (80, 00020, 000) = 60, 000. Then, 60, 000/80, 000=75%.
Detailed explanation2: The contribution margin is calculated by subtracting the total variable costs from the total sales revenue. The formula is: Contribution Margin = Total Sales Revenue – Total Variable Costs.
Detailed explanation3: If a hospital’s sales are $500, 000, variable costs are $200, 000 and fixed costs are $240, 000, what is the contribution margin ratio? Answer: DIf a hospital’s sales are $500, 000, variable costs are $200, 000 and fixed costs are $240, 000, the contribution ratio is 60%.
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