Calculating Total Variable Expenses for Coronado Industries

Coronado Industries, a company with a sales revenue of $3,000,000 and fixed expenses of $700,000 has a contribution margin ratio of 36%. The contribution margin ratio is an important metric that indicates the percentage of revenue that contributes to covering variable expenses and ultimately profit.

To calculate the total variable expenses for Coronado Industries, we need to follow the formula mentioned earlier. First, we need to determine the contribution margin. The contribution margin is the difference between the sales revenue and the total variable expenses. In this case, the contribution margin ratio is 36%, which means that 36% of every dollar of sales revenue contributes to covering variable expenses.

Next, we need to calculate the total variable expenses using the formula: Total Variable Expenses = Sales - (Fixed Expenses + Net Income). Using the given data, we can calculate the total variable expenses for Coronado Industries.

By substituting the values into the formula, we get: Total Variable Expenses = $3,000,000 - ($700,000 + $1,080,000) Total Variable Expenses = $3,000,000 - $1,780,000 Total Variable Expenses = $1,220,000

Therefore, the total variable expenses for Coronado Industries amount to $1,220,000. This means that after subtracting the fixed expenses and net income from sales revenue, the company is left with $1,220,000 to cover its variable expenses. It is crucial for businesses to carefully manage their variable expenses to ensure profitability and financial stability.