Question

Fireplace Service company provides fireplace cleaning services and has variable costs of $\$100$ per fireplace cleaning and revenue of $\$250$.

Their contribution margin is $\$\_\_\_\_\_$.

Answer 1

Determine the contribution margin:

The contribution margin is the difference between the revenue and the costs.

The given cost is $\$100$ and the revenue made by the company is $\$250$.

Determine the margin:

$\begin{array}{rcl}\mathrm{Marginal}\mathrm{Contribution}& =& \mathrm{Revenue}-\mathrm{Cost}\\ & \Rightarrow & \mathrm{Marginal}\mathrm{Contribution}=\$250-\$100\\ & \Rightarrow & \mathrm{Marginal}\mathrm{Contribution}=\$150\end{array}$

Hence,

Fireplace Service company provides fireplace cleaning services and has variable costs of $\$100$ per fireplace cleaning and revenue of $\$250$.

Their contribution margin is $\mathbf{\$}\underline{\mathbf{150}}$ .