Question

13.If sales are $100,000, fixed expenses are $30,000, and variable expenses are $57,000, then the contribution margin must be:

14. If the cost of goods sold is $95,000, beginning merchandise inventory is $8,000, and merchandise purchases are $110,000, then the ending merchandise inventory must be:

15. If sales are $100,000, selling and administrative expenses are $29,500, and the gross margin is $40,000, then the net operating income must be:

Answer 1

Answer-13)- Contribution margin = Sales –Variable expenses

= $100000 - $57000

= $43000

14)- The ending merchandise inventory must be = $23000.

Explanation – Cost of goods sold = Beginning merchandise inventory+ Merchandise purchases - Ending merchandise inventory

$95000 = $8000+$110000 - Ending merchandise inventory

Ending merchandise inventory = $8000+$110000 -$95000

= $23000

15)- The net operating income must be = $10500.

Explanation- Net operating income = Gross margin - Selling & administrative expenses

= $40000 - $29500

= $10500