The following information for the past year for the Blaine Corporation has been provided: Fixed costs: Manufacturing $115,000 Marketing 21,000 Administrative 16,000 Variable costs: Manufacturing $114,000 Marketing 23,000 Administrative 34,000 During the year, the company produced and sold 30,000 units of product at a selling price of $18.50 per unit. There was no beginning inventory of product at the beginning of the year. What is the contribution margin ratio for Blaine Corporation (round to 1 decimal) ?

Question

Business

Gordon Carpenter

9 May, 13:55

The following information for the past year for the Blaine Corporation has been provided: Fixed costs: Manufacturing $115,000 Marketing 21,000 Administrative 16,000 Variable costs: Manufacturing $114,000 Marketing 23,000 Administrative 34,000 During the year, the company produced and sold 30,000 units of product at a selling price of $18.50 per unit. There was no beginning inventory of product at the beginning of the year. What is the contribution margin ratio for Blaine Corporation (round to 1 decimal) ?

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Marge · Answer 1

Contribution margin ratio = 69.2 %

Explanation:

Contribution margin ratio is the percentage of sales revenue that is earned as contribution. Contribution is sales less variable cost

Contribution margin ratio = ((Sales - variable cost) / Sales) * 100

Contribution = sales less variable cost

Sales revenue = (18.50 * 30,000) = 555,000

Variable cost = 114,000 + 23,000 + 34,000 = 171,000

Fixed cost = 115,000 + 21,000 + 16,000 = 152,000

Contribution margin ratio

= (555,000 - 171,000) / 555,000 * 100

= 0.691 * 100

= 69.2 %

Contribution margin ratio = 69.2 %