Bolka Corporation, a merchandising company, reported the following results for October:<\/p>\n\n\n\n
Sales<\/p>\n\n\n\n
$ 418,000<\/p>\n\n\n\n
Cost of goods sold (all variable)<\/p>\n\n\n\n
$ 175,500<\/p>\n\n\n\n
Total variable selling expense<\/p>\n\n\n\n
$ 23,700<\/p>\n\n\n\n
Total fixed selling expense<\/p>\n\n\n\n
$ 21,800<\/p>\n\n\n\n
Total variable administrative expense<\/p>\n\n\n\n
$ 16,200<\/p>\n\n\n\n
Total fixed administrative expense<\/p>\n\n\n\n
$ 34,300<\/p>\n\n\n\n
The contribution margin for October is:<\/p>\n\n\n\n
Multiple Choice<\/p>\n\n\n\n
A $202,600<\/p>\n\n\n\n
B $361,900<\/p>\n\n\n\n
C $146,500<\/p>\n\n\n\n
The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n The contribution margin is calculated by subtracting total variable expenses (cost of goods sold, variable selling expense, and variable administrative expense) from sales. Fixed expenses are not considered in the calculation of contribution margin because they do not vary with sales volume.<\/p>\n\n\n\n The contribution margin for October is $202,600<\/strong>, which corresponds to Option A<\/strong>.<\/p>\n\n\n\n The contribution margin is an important metric because it represents the amount of sales revenue available to cover fixed costs and then contribute to profit. By understanding the contribution margin, a company can assess its profitability and how changes in sales or costs impact its bottom line. For Bolka Corporation, the $202,600 contribution margin indicates how much of the $418,000 in sales revenue remains after covering variable costs, which can be used to cover fixed expenses and potentially generate profit.<\/p>\n","protected":false},"excerpt":{"rendered":" Bolka Corporation, a merchandising company, reported the following results for October: Sales $ 418,000 Cost of goods sold (all variable) $ 175,500 Total variable selling expense $ 23,700 Total fixed selling expense $ 21,800 Total variable administrative expense $ 16,200 Total fixed administrative expense $ 34,300 The contribution margin for October is: Multiple Choice A […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-182194","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/182194","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=182194"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/182194\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=182194"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=182194"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=182194"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Step-by-Step Calculation:<\/h3>\n\n\n\n
\n
The total sales for October are given as $418,000.<\/li>\n\n\n\n\n
To find the total variable costs, we add together all variable costs: Total\u00a0Variable\u00a0Costs=COGS+Variable\u00a0Selling\u00a0Expense+Variable\u00a0Administrative\u00a0Expense\\text{Total Variable Costs} = \\text{COGS} + \\text{Variable Selling Expense} + \\text{Variable Administrative Expense} Total\u00a0Variable\u00a0Costs=175,500+23,700+16,200=215,400\\text{Total Variable Costs} = 175,500 + 23,700 + 16,200 = 215,400<\/li>\n\n\n\n
The contribution margin is calculated by subtracting the total variable costs from sales: Contribution\u00a0Margin=Sales\u2212Total\u00a0Variable\u00a0Costs\\text{Contribution Margin} = \\text{Sales} – \\text{Total Variable Costs} Contribution\u00a0Margin=418,000\u2212215,400=202,600\\text{Contribution Margin} = 418,000 – 215,400 = 202,600<\/li>\n<\/ol>\n\n\n\nConclusion:<\/h3>\n\n\n\n
Explanation:<\/h3>\n\n\n\n