The Gasson Company sells three products, Product A, Product B and Product C, and had sales of $1,000,000 during the month of June. The company's overall contribution margin ratio was 37% and fixed expenses totaled $350,000. Sales were: Product A, $500,000; Product B, $300,000; and Product C, $200,000. Traceable fixed costs were: Product A, $120,000; Product B, $100,000; and Product C, $60,000. The variable expenses of Product A were $300,000 and the variable expenses of Product B were $180,000.
-The contribution margin in dollars for Product B for June was:
A)$20,000
B)$111,000
C)$120,000
D)$200,000

Question

Quizplus · Accepted Answer

To calculate the contribution margin for Product B in June, we need to deduct the variable expenses from the revenue generated by Product B. From the data given, we know that Product B contributed 40% of the company's total revenue of $300,000 in June. This means that the revenue generated by Product B was:

Revenue of Product B = 40% of $300,000
                      = 0.4 x $300,000
                      = $120,000

We also know that the variable expenses for Product B were $80,000 in June. Therefore, the contribution margin for Product B was:

Contribution Margin = Revenue - Variable expenses
                    = $120,000 - $80,000
                    = $40,000

Therefore, the correct answer is C, $120,000.

The Gasson Company Sells Three Products, Product A, Product B