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Stuart inc is a merchandising firm. Next month the company expects to sell 800 units. The...

Stuart inc is a merchandising firm. Next month the company expects to sell 800 units. The following data describe the company's revenue and cost structure: Selling price per unit $40 Sales commission 5% Purchase price (cost) per unit $18 Advertising expense $4,000 per month Administrative expense $4,500 per month plus 15% of sales Assume that all activity mentioned in this problem is within the relevant range. The expected contribution margin next month is? A. $11,200. B. $14,400. C. $16,000. D. $17,600.

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Answer #1
sales revenue (800*$40) $         32,000
Less:
Variable costs
Purchase cost (18*800) $         14,400
Sales commission (800*40*5%) $            1,600
Variable Administrative expenses (32000*15%) $            4,800
Contribution margin $         11,200
Correct Answer = A.$11200
NOTE: ASK YOUR QUERIES.PLEASE DO UPVOTE
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