Wang Co.manufactures and sells a single product that sells for $450 per unit; variable costs are $270 per unit.Annual fixed costs are $800,000.Current sales volume is $4,200,000.
-Compute the contribution margin ratio.
A)40.0%.
B)66.7%.
C)20.7%.
D)50.0%.
E)19.3%.

Question

Quizplus · Accepted Answer

Contribution margin ratio = Contribution margin / Sales revenue= (Sales revenue - Variable costs) / Sales revenue= ($4,200,000 - $2,856,000) / $4,200,000= $1,344,000 / $4,200,000= 0.32= 32%

Wang CoManufactures and Sells a Single Product That Sells for $450