Martinez Company sells one product that has a sales price of $20 per unit,variable costs of $8 per unit,and total fixed costs of $200,000.what is the contribution margin ratio?
A) 40%
B) 60%
C) 50%
D) 66%

Question

Quizplus · Accepted Answer

Contribution margin per unit = Sales price per unit - Variable cost per unit 
Contribution margin per unit = $20 - $8 = $12
Contribution margin ratio = (Contribution margin per unit / Sales price per unit) x 100% 
Contribution margin ratio = ($12 / $20) x 100% = 60% 
Therefore, the contribution margin ratio is 60%. Choice B is the correct answer.

Martinez Company Sells One Product That Has a Sales Price