Question

Given:
Opening sales = Rs. 10000
Closing sales = Rs. 90000
Variable cost = Rs. 20000
fixed cost = Rs. 10000
contribution margin will be ________.

• A. 80000
• B. 120000
• C. 20000
• D. 110000

Answer 1

Answer: (A)

80000

Contribution margin = Sales\times{P/V Ratio}
=frac{100000\times{80}}{100}
= 80000
P/V Ratio = \frac{Contribution}{Sales}\times100
= \frac{80000}{100000}\times100
=80%
Contribution = sales - variable Cost
=100000-20000
=80000
Total Sales = Opening Balance + Closing Balance
=10000+90000
=100000.