Ask Question
12 November, 04:05

Variable Cost Ratio, Contribution Margin Ratio Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year, Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Fixed factory overhead is $30,000 and fixed selling and administrative expense is $48,000. Required: 1. Calculate the variable cost ratio. 2. Calculate the contribution margin ratio.

+2
Answers (1)
  1. 12 November, 06:09
    0
    Instructions are listed below.

    Explanation:

    Giving the following information:

    The company plans to sell 3,500 pairs of shoes at $60 each in the coming year. The unit variable cost is $21.

    1) We need to use the following formula:

    variable cost ratio = Variable cost / selling price

    variable cost ratio = 21/60 = 0.35

    2) We need to use the following formula:

    Contribution margin ratio = (selling price - unitary variable cost) / selling price

    Contribution margin ratio = (60 - 21) / 60 = 0.65
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Variable Cost Ratio, Contribution Margin Ratio Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year, Unit ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers