Question it costs homer's manufacturing $0.95 to produce baseballs and homer sells them for $9 a piece. homer pays a sales commission of 5% of sales revenue to his sales staff. homer also pays $16,000 a month rent for his factory and store, and also pays $75,000 a month to his staff in addition to the commissions. homer sold 72,500 baseballs in june. if homer prepares a contribution margin income statement for the month of june, what would be his contribution margin?

Ans. Homer´s contribution Margin is  $551.000 , in percentage is 84.44%

Explanation:

Hi, to find the contribution margin in dollars and in percentage we need to use two formulas.

Now, here we have only two types of variable costs, the manufacturing cost of $0.95 per baseball and that 5% of sales revenue and those are the only costs we should be using, the other costs are fixed so there is no room for them in order to find the contribution margin.

It should look like this:

Now, in percentage:

So the contribution margin in dollars is $551,000, in percentage is 84.44%

Best of luck.

the definition of a small business is an independently owned and operated company that is limited in size and in revenue depending on the industry. a local bakery that employs 10 people is an example of a small business. a manufacturing facility that employees less than 500 people is an example of a small business.

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