If a company had a contribution margin of $750,000 and a contribution margin ratio of 40%, total variable costs must have been
A)$1,125,000.
B)$450,000.
C)$1,875,000.
D)$300,000.

Question

Quizplus · Accepted Answer

The contribution margin ratio is calculated as the contribution margin divided by sales. If the contribution margin is $750,000 and the ratio is 40%, then sales must be $750,000 / 0.40 = $1,875,000. Total variable costs are sales minus the contribution margin, which is $1,875,000 - $750,000 = $1,125,000.

If a Company Had a Contribution Margin of $750,000 and a Contribution