Question

2: A cement manufacturer has supplied the following data

Tons of cement produced and sold: 290000

Sales revenue: 994000

Variable expenses: 235000

Fixed expenses: 322000

Variable selling and administrative expenses 172540

Fixed selling and administrative expenses 96000

Net operating income 168460

The company’s contribution margin is:

A:44%

B:67.6%

C:16.9%

Answer 1

Particulars	Amount
Sales	994,000
Less:
Variable expenses	235,000
Variable Selling and Admin expenses	172,540
Contribution	586,460
Contribution margin	59.00%

However among the options there is no option which has 59% as answer.

Therefore there seem to be some misprinting of the options.

If the question would have asked operating profit margin instead of contribution margin,

Operating Profit margin = Operating Profit / Total sales = 168,460 / 994,000 = 16.9%

Thus answer would have been option (C) 16.9%

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