Question

A catering company executes a dinner party for 85 guests. The following numbers were generated.

Total Sales 4975.00

Food purchases 998.25

Labor Expenses   850.00

Smallwares Rental Expense                425.00

Kitchen rental expense 650.00

After all expenses, what percentage of sales is contribution margin?

a) 41.24%

b) 4.12%

c) 24.25%

d) Cannot be determined

Please explain your answer, I'm trying to actually learn!

Answer 1

Contribution margin
Sales revenue			4975
Less: expenss
Food cost		998.25
Labor expenses		850
Small ware expenses		425
Kitchen rental expenss		650
Total expenss			2923.25
Contribution margin			2051.75
Divide: Sales revenue			4975
% contribution to Sales revenue			41.24%