Contribution Margin Analysis – Short Answer

Practice Question

Intro to Managerial Accounting
Decision-Making: Cost-Volume-Profit Analysis
Contribution Margin Analysis
Short Answer

If fixed costs are $20,000 and variable costs are $30,000 while total sales are $100,000, what is the net income?

Answer +
Correct Answer: $50,000
Explanation +

Net income = Sales – Total Costs = $100,000 – ($30,000 + $20,000) = $50,000.

This calculation is crucial for assessing the profitability of operations (Page 47).