Asked by Manuel Rodriguez on Jul 22, 2024
Verified
The company's contribution margin ratio is closest to:
A) 39.0%
B) 51.2%
C) 11.0%
D) 48.8%
Contribution Margin Ratio
A financial metric used to analyze the profitability of a product, calculated as (Sales - Variable Costs) / Sales.
- Grasp the principle of the contribution margin ratio and its impact on profitability.
Verified Answer
FM
Faisal MangalJul 24, 2024
Final Answer :
D
Explanation :
Contribution margin = Sales - Variable expenses
= $2,788,000 - ($1,156,000 + $272,000)= $2,788,000 - $1,428,000 = $1,360,000
CM ratio = Contribution margin ÷ Sales
= $1,360,000 ÷ $2,788,000 = 0.488
= $2,788,000 - ($1,156,000 + $272,000)= $2,788,000 - $1,428,000 = $1,360,000
CM ratio = Contribution margin ÷ Sales
= $1,360,000 ÷ $2,788,000 = 0.488
Learning Objectives
- Grasp the principle of the contribution margin ratio and its impact on profitability.
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