Fessler, Inc. has a product with a selling price per unit of $200, the unit variable cost is $75, and the total monthly fixed costs are $300,000. How much is Fessler's contribution margin ratio?
A) 62.5%
B) 37.5%
C) 150%
D) 266.6%

Question

Quizplus · Accepted Answer

Contribution Margin = Selling Price per Unit - Variable Cost per Unit

Contribution Margin per Unit = $200 - $75 = $125

Contribution Margin Ratio = Contribution Margin per Unit / Selling Price per Unit

Contribution Margin Ratio = $125 / $200 = 0.625 or 62.5%