Perfect Clean, Inc. provides housekeeping services. The following financial data have been provided.

Service Revenue

$80,000

Cleaning Supplies Used

22,000

Wages Expense

19,350

Office Rent Expense

5,150

Depreciation Expense-Machinery

550

Calculate the contribution margin and the contribution margin ratio. (Round your contribution margin to the nearest dollar, and your contribution margin ratio to two decimal places.)

A) $38,650; 48.31% B) $74,850; 93.56%

C) $60,650; 75.81% D) $32,950; 41.19%

Question

Business

Azaria Hayes

19 April, 19:23

Perfect Clean, Inc. provides housekeeping services. The following financial data have been provided.

Service Revenue

$80,000

Cleaning Supplies Used

22,000

Wages Expense

19,350

Office Rent Expense

5,150

Depreciation Expense-Machinery

550

Calculate the contribution margin and the contribution margin ratio. (Round your contribution margin to the nearest dollar, and your contribution margin ratio to two decimal places.)

A) $38,650; 48.31% B) $74,850; 93.56%

C) $60,650; 75.81% D) $32,950; 41.19%

+3

Answers (1)

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Puffy · Answer 1

A) $38,650; 48.31%

Explanation:

The computation of the contribution margin and the contribution margin ratio is shown below:

Contribution margin = Service Revenue - Cleaning Supplies Used - wages expense

= $80,000 - $22,000 - $19,350

= $38,650

The variable cost is Cleaning Supplies Used + wages expense

And, the contribution margin ratio equals to

= (Contribution margin : sales) * 100

= ($38,650 : $80,000) * 100

= 48.31%