Contribution Margin of G+ Company
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G+ Company is a division of GHI Company. This data pertains to G+ division. Sales amounted to $800,000. Cost of sales is 60% of sales. Other direct expenses of the division amount to 15% of sales. Allocated expenses are $90,000. Interest amounts to 10% of long-term debt. Taxes are 30% of income. Total assets are $500,000 wtih 10% representing short-term and 40% representing long-term debt.
The division's contribution margin amounts to:
a) $320,000
b) $380,000
c) $420,000
d) $480,000
e) None of the above
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Solution Summary
This brief solution calculates the division contribution margin using the sales and share of costs.
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