Stanley’s Bicycles stores buys bicycles on average for $630 and sells them on av

Question

Stanley’s Bicycles stores buys bicycles on average for $630 and sells them on average for $780. He pays a sales commission of 15% of sales revenue to his staff. Stanley pays $1900 a month rent for the store, he also pays $7000 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? Stanley’s Bicycles stores buys bicycles on average for $630 and sells them on average for $780. He pays a sales commission of 15% of sales revenue to his staff. Stanley pays $1900 a month rent for the store, he also pays $7000 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?

Explanation / Answer

Stanley's Bicycles Stores Calculation Of Contribution Margin Sales(110*780) $      85,800 Less: Purchase Cost(110*630) $      69,300 Gross Contribution Margin $      16,500 Less: Sales commision(85800*15%) $      12,870 Contribution Margin $        3,630

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