The Following Information Is Available for Chap Company Which Amount Would You Find on Chap's CVP Income Statement

question 7

Multiple Choice

The following information is available for Chap Company: $\begin{array}{llcc} \text { Sales} \ldots \ldots \ldots \ldots \ldots \ldots \ldots\ldots \ldots \ldots\ldots \ldots \ldots &\$350,000\\ \text { Total fixed expenses } \ldots \ldots \ldots \ldots \ldots\ldots \ldots&\$60,000\\ \text { Cost of goods sold} \ldots \ldots \ldots \ldots \ldots\ldots \ldots\ldots &120,000\\ \text { Total variable expenses } \ldots \ldots \ldots \ldots \ldots\ldots&100,000\\\end{array}$
Which amount would you find on Chap's CVP income statement?

• A)contribution margin of $250,000
• B)contribution margin of $190,000
• C)gross profit of $230,000
• D)gross profit of $190,000

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Definitions:

Retail Inventory

The total value of goods available for sale at a retail location, including items on the sales floor and in stock.

Shrinkage

Retail inventory that is unaccounted for between receipt and sale.

Economic Order Quantity

The ideal order quantity a company should purchase to minimize its inventory costs, including holding, setup, and shortage costs.

Holding Costs

Expenses incurred to store and maintain inventory over a period, including warehousing, insurance, and spoilage costs.