Stanley's Bicycles store buys bicycles on average for $600 and sells them on average for $750. He pays a sales commission of 15% of sales revenue to his sales staff. Stanley pays $1900 a month rent for his store, and also pays $5000 a month to his staff in addition to the commissions. Stanley sold 110 bicycles in June. If Stanley prepares a contribution margin income statement for the month of June, what would be his contribution margin?

Question

Cecilia Adkins

Business

8 January, 00:41

Stanley's Bicycles store buys bicycles on average for $600 and sells them on average for $750. He pays a sales commission of 15% of sales revenue to his sales staff. Stanley pays $1900 a month rent for his store, and also pays $5000 a month to his staff in addition to the commissions. Stanley sold 110 bicycles in June. If Stanley prepares a contribution margin income statement for the month of June, what would be his contribution margin?

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Answers (1)

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Casey · Answer 1

Contribution margin = $4,125

Unitary contribution margin = $37.5

Explanation:

Giving the following information:

Stanley's Bicycles store buys bicycles on average for $600 and sells them on average for $750. He pays a sales commission of 15% of sales revenue to his sales staff. Stanley pays $1900 a month rent for his store and also pays $5000 a month to his staff in addition to the commissions. Stanley sold 110 bicycles in June.

Sales = 750*110 = $82,500

Variable cost = [600 + (0.15*750) ]*110 = $78,375 (-)

Contribution margin = $4,125

Unitary contribution margin = 750 - 712.5 = $37.5