Answer:
The contribution margin is $29,650
The contribution margin ratio is 42.35%
Explanation:
Contribution Margin : The contribution margin shows a difference between sales revenue and variable cost.
For computing the contribution margin, the following formula is used which is shown below:
= Service revenue - Cleaning supplies - wages expenses
= $70,000 - $22,000 - $18,350
=$29,650
Thus, the contribution margin is $29,650
Now, the contribution margin ratio is a ratio between contribution margin and sales.
In mathematically,
Contribution margin ratio = Contribution ÷ Service revenue
= $29,650 ÷ $70,000
= 42.35%
Hence, the contribution margin ratio is 42.35%
