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1 November, 08:35

A manufacturer of tiling grout has supplied the following dа ta:

Kilograms produced and sold 330,000

Sales revenue $1,920,000

Variable manufacturing expense $957,000

Fixed manufacturing expense $260,000

Variable selling and administrative expense $360,000

Fixed selling and administrative expense $226,000

Net operating income $117,000

The company's contribution margin ratio is closest to:

a. 50.2%

b. 81.3%

c. 31.4%

d. 74.7%

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Answers (1)
  1. 1 November, 12:05
    0
    c. 31.4%

    Explanation:

    As we know that

    Contribution margin ratio is

    = Contribution margin : Sales revenue * 100

    where,

    Contribution margin is

    = Sales revenue - Variable manufacturing expense - Variable selling and administrative expense

    = $1,920,000 - $957,000 - $360,000

    = $603,000

    And the sales revenue is $1,920,000

    So, the ratio is

    = $603,000 : $1,920,000 * 100

    = 31.40%
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