Asked by Andrea Weitoschova on Jun 03, 2024
Verified
The company's contribution margin ratio is closest to:
A) 72.6%
B) 65.7%
C) 34.3%
D) 27.4%
Contribution Margin Ratio
A ratio that measures the proportion of each sales dollar remaining after variable costs have been deducted.
- Understand the significance of the contribution margin ratio and its influence on profitability.
Verified Answer
ZK
Zybrea KnightJun 07, 2024
Final Answer :
C
Explanation :
Contribution margin = Sales - Variable expenses
= $2,412,000 - ($1,170,000 + $414,000)
= $2,412,000 - $1,584,000 = $828,000
CM ratio = Contribution margin ÷ Sales
= $828,000 ÷ $2,412,000 = 0.343
= $2,412,000 - ($1,170,000 + $414,000)
= $2,412,000 - $1,584,000 = $828,000
CM ratio = Contribution margin ÷ Sales
= $828,000 ÷ $2,412,000 = 0.343
Learning Objectives
- Understand the significance of the contribution margin ratio and its influence on profitability.
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