Hollis Industries produces flash drives for computers, which it sells for $20 each.Each flash drive costs $12 of variable costs to make.During April, 1,000 drives were sold.Fixed costs for March were $2 per unit for a total of $1,000 for the month.How much is the contribution margin ratio?
A)30%
B)40%
C)60%
D)70%

Question

Quizplus · Accepted Answer

The contribution margin per unit is the selling price minus the variable cost, which is $20 - $12 = $8. The contribution margin ratio is the contribution margin per unit divided by the selling price, which is $8 / $20 = 0.40 or 40%.

Hollis Industries Produces Flash Drives for Computers, Which It Sells