Stanley's Bicycles store buys bicycles on average for $600 and sells them on average for $750.He pays a sales commission of 15% of sales revenue to his sales staff.Stanley pays $1,400 a month rent for his store,and also pays $3,000 a month to his staff in addition to the commissions.Stanley sold 120 bicycles in June.If Stanley prepares a contribution margin income statement for the month of June,what would be his contribution margin?
A)$4,500
B)$90,000
C)$85,500
D)$175,500

Question

Quizplus · Accepted Answer

A)
Revenue $750 × 120 = $90,000
Less: Variable cost $600 × 120 = 72,000
Sales Commission $90,000 × 15% = 13,500
Contribution Margin 4,500

Stanley's Bicycles Store Buys Bicycles on Average for $600 and Sells