The following income statement is provided for Ramirez Company for the current year: Sales revenue (3,500 units × $21.00 per unit) $ 73,500 Cost of goods sold (variable; 3,500 units × $9.00 per unit) (31,500 ) Cost of goods sold (fixed) (5,000 ) Gross margin 37,000 Administrative salaries (7,000 ) Depreciation (5,000 ) Supplies (3,500 units × $3.00 per unit) (10,500 ) Net income $ 14,500 What amount was the company's contribution margin?

Answer by Guest

Answer:

Contribution margin = $31,500

Explanation:

Given:

Sales revenue (3,500 units × $21.00 per unit) = $73,500

Cost of goods sold (variable: 3,500 units × $9.00 per unit) = $31,500

Supplies (3,500 units × $3.00 per unit) = $10,500

Find:

Contribution margin

Computation:

Contribution margin = Sales Revenue - Variable cost - Supplies

Contribution margin = $73,500 - $31,500 - $10,500

Contribution margin = $31,500

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