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Keaubie Company has the following: Total Sales: $500,000; Contribution Margin Ratio: 20%; Fixed Costs: $80,000; What is the amount of Keaubie Company's net income or net loss for the period? $20,000 net income $100,000 net income $20,000 net loss $100,000 net loss

Respuesta :

TomShelby

Answer:

(A) $20,000 net income

Explanation:

[tex]Sales \times  $Contribution Margin Ratio = Total Contribution[/tex]

500,000 * 20% = 100,000

[tex]Contribution - Fixed \: Cost = Result \: for \: the \: period[/tex]

100,000 - 80,000 = 20,000 net income

Remember: The contribution margin represent how much contribution bring to the table $1 of sales.

So if CMR equals to 20% each dollar generates $0.20 of contribution

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