Question

The following information pertains to the West Division of Burger Company:

Net sales $6,000
Variable costs:
Cost of merchandise sold 1,000
Operating expenses 450
Fixed costs:
Controllable by segment manager 1,600
Controllable by others 1,250
Unallocated costs 750

The contribution margin of the West Division is ________.
A) $2,750
B) $3,650
C) $4,350
D) $4,550

Answer 1

Answer:

D) $4,550

Explanation:

Contribution margin = Net Sales - Total Variable cost

Net sales                             $6,000

Les: Variable costs:

Cost of merchandise sold  $1,000

Operating expenses           $450  

Contribution Margin            $4,550

All other costs are fixed cost which are not used in contribution margin calculation.

So the correct answer is D) $4,550.