A cement manufacturer has supplied the following dа ta: Tons of cement produced and sold 275,000 Sales revenue $ 979,000 Variable manufacturing expense $ 232,000 Fixed manufacturing expense $ 313,000 Variable selling and administrative expense $ 110,650 Fixed selling and administrative expense $ 93,000 Net operating income $ 230,350 The company's contribution margin ratio is closest to:

Question

Business

Myla Martinez

28 October, 10:40

A cement manufacturer has supplied the following dа ta: Tons of cement produced and sold 275,000 Sales revenue $ 979,000 Variable manufacturing expense $ 232,000 Fixed manufacturing expense $ 313,000 Variable selling and administrative expense $ 110,650 Fixed selling and administrative expense $ 93,000 Net operating income $ 230,350 The company's contribution margin ratio is closest to:

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Answers (1)

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Eddie Mays · Answer 1

Contribution Margin Ratio = 342,650/$ 979,000 = 0.35 or 35%

Explanation:

Contribution Margin Ratio = Contribution Margin/Sales revenue

Contribution Margin Ratio = Sales revenue Less Variable Costs/Sales revenue

Contribution Margin Ratio = $ 979,000 - $ 636,350 / $ 979,000

Contribution Margin Ratio = 342,650/$ 979,000 = 0.35 or 35%

Working

Sales revenue $ 979,000

Variable manufacturing expense $ 232,000

Less Variable selling and administrative expense $ 110,650

Contribution Margin $ 636,350