Sherman Company provides carpet cleaning services to commercial and residential customers. The commercial business segment provided services to 200 customers. The residential business segment provided services to 400 customers. Using the data below, determine the average amount Sherman Company charged each type of customer for services, the average variable cost per customer, and the average contribution margin per customer, rounded to two decimal places. What caused the difference in contribution margin in the two segments?

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Business

Jaelyn Lawrence

13 July, 12:21

Sherman Company provides carpet cleaning services to commercial and residential customers. The commercial business segment provided services to 200 customers. The residential business segment provided services to 400 customers. Using the data below, determine the average amount Sherman Company charged each type of customer for services, the average variable cost per customer, and the average contribution margin per customer, rounded to two decimal places. What caused the difference in contribution margin in the two segments?

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Johan Meadows · Answer 1

Contribution Margin Ratio

Contribution margin ratio is the percentage of contribution margin to the total sales; where contribution margin is the value left after deducting all the variable expenses from the sale revenue.

Contribution margin ratio is calculated by dividing contribution margin by sale value.

Contributing margin ratio = contributing ratio / sale value