Boswell company reported the following information for the current year: Sales (50000 units) $1000000 direct materials and direct labor $500000 other variable costs $50000 and fixed costs $360000. What is Boswell's contribution margin ratio?
A) 68%.
B) 45%.
C) 32%.
D) 55%.

Question

Quizplus · Accepted Answer

Contribution margin = Sales - (Direct materials and direct labor + Other variable costs)
Contribution margin = $1000000 - ($500000 + $50000) = $450000
Contribution margin ratio = Contribution margin / Sales
Contribution margin ratio = $450000 / $1000000 = 0.45 or 45%

Boswell Company Reported the Following Information for the Current Year