Ito Company has provided the following information: $$\begin{array} { | l | r | }
\hline \text { Price per unit } & \$ 48 \
\hline \text { Variable cost per unit } & 18 \
\hline \text { Fixed costs per month } & \$ 20,000 \
\hline
\end{array}$$ What is the contribution margin ratio?
A) 18%
B) 38%
C) 48%
D) 63%

Question

Ito Company has provided the following information: $$\begin{array} { | l | r | } 
\hline \text { Price per unit } & \$ 48 \
\hline \text { Variable cost per unit } & 18 \
\hline \text { Fixed costs per month } & \$ 20,000 \
\hline
\end{array}$$ What is the contribution margin ratio?
A) 18%
B) 38%
C) 48%
D) 63%

Quizplus · Accepted Answer

The contribution margin ratio is calculated as (Price per unit - Variable cost per unit) / Price per unit. So, (48 - 18) / 48 = 30 / 48 = 0.625 or 62.5%, which rounds to 63%.

Ito Company Has Provided the Following Information What Is the Contribution Margin Ratio? A) 18% B) 38

Ito Company Has Provided the Following Information What Is the Contribution Margin Ratio?
A) 18%
B) 38