The following data relate to Lebeaux Corporation for the year just ended: $\begin{array}{lr}\text { Sales revenue }&\$750,000\
\text { Cost of goods sold: }\
{\text { Variable portion }} & 370,000 \
\text { Fixed portion } & 110,000 \
\text { Variable selling and administrative costs } & 50,000 \
\text { Fixed selling and administrative cost } & 75,000
\end{array}$ Which of the following statements is correct?
A) Lebeaux's variable-costing income statement would show a gross margin of $270,000.
B) Lebeaux's variable costing income statement would show a contribution margin of $330,000.
C) Lebeaux's absorption-costing income statement would show a contribution margin of $330,000.
D) Lebeaux's absorption costing income statement would show a gross margin of $330,000.
E) Lebeaux's absorption-costing income statement would show a gross margin of $145,000.

Question

Quizplus · Accepted Answer

The contribution margin under variable costing is calculated as Sales Revenue minus all variable costs. Here, it is $750,000 - ($370,000 + $50,000) = $330,000.

The Following Data Relate to Lebeaux Corporation for the Year