Following is relevant information for Snowdon Sandwich Shop, a small business that serves sandwiches: Total fixed cost per month $1,500 Variable cost per sandwich 2.50 Sales price per sandwich 5.25 During the month of June, Snowdon sold 600 sandwiches. Using the preceding information, prepare its contribution margin income statement for the month of June.

Question

Ainsley Townsend

Business

13 July, 22:37

Following is relevant information for Snowdon Sandwich Shop, a small business that serves sandwiches: Total fixed cost per month $1,500 Variable cost per sandwich 2.50 Sales price per sandwich 5.25 During the month of June, Snowdon sold 600 sandwiches. Using the preceding information, prepare its contribution margin income statement for the month of June.

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Essence Irwin · Answer 1

Answer: Contribution margin is 1,650

Explanation:

Contribution margin is calculated with the Net sales minus de Variable cost.

Considering that the sales price per sandwich is 5.25 and the quantity sold was 600 sandwiches the Net sale amount is 3,150.

To calculate the variable cost you use the variable cost per sandwich and the quantity sold, the total variable cost is 1,500.

The contribution margin resulted in 1,650 (3,150 minus 1,500), with this amount the fixed cost per month could be covered.