The company's contribution margin ratio is closest to:

A) 42.7%
B) 57.3%
C) 45.8%
D) 21.0%

Question

The company's contribution margin ratio is closest to:A) 42.7%B) 57.3%C) 45.8%D) 21.0%

Areeba Imran · Accepted Answer

Final Answer : B, Explanation :  Contribution Margin Ratio = (Total Sales - Total Variable Costs) / Total SalesTotal Sales = $135,000 + $70,000 + $35,000 = $240,000Total Variable Costs = $81,000 + $49,000 + $28,000 = $158,000Contribution Margin Ratio = ($240,000 - $158,000) / $240,000 = 57.3% Contribution margin = Sales - Variable expenses= $2,132,000 - ($650,000 + $260,000)= $2,132,000 - $910,000 = $1,222,000CM ratio = Contribution margin ÷ Sales= $1,222,000 ÷ $2,132,000 = 0.573

The company's contribution margin ratio is closest to:

A) 42.7%
B) 57.3%
C) 45.8%
D) 21.0%

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