Home › ACCA › Management Accounting › Variable Costing Analysis › Sales are $320,000, variable cost of goods sold …
Sales are $320,000, variable cost of goods sold is $52,800 and variable selling expenses are $121,800. What is the contribution margin ratio?
A38.0%
B42.3%
C45.4%
D55.0%
Answer & Solution
Correct answer: C. 45.4%
1. Manufacturing margin is $320,000 minus $52,800, which is $267,200.
2. Contribution margin is $267,200 minus $121,800, which is $145,400.
3. The ratio is $145,400 divided by $320,000, which is 45.4%.
4. For every $1.00 of sales, a little over $0.45 remains to pay fixed costs and yield profit.
5. 38.0% and 55.0% are the ratios of the two individual products, which sit either side of the company figure.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 6.6 Contribution Margin Analysis_
Related questions
A hotel reports a contribution margin of $51,100 for the month against total fixed costs oA hotel records rooms revenue of $84,000 and total variable costs of $32,900 for the monthProjection 1 gives a contribution margin of $375,000 and Projection 6 gives $401,500. FixeFour sales staff report contribution margins of $14,700, $13,400, $22,100 and $17,400 on sProduct 1 has a contribution margin ratio of 38.0% and Product 2 has 55.0%, on sales of $1Sales stay at 15,000 units while production is 15,000, then 20,000, then 10,000 units. WhaA manufacturer sells more units in the period than it produces. Which operating income fig15,000 units are sold at $50 each, cost of goods sold under absorption costing is $575,000