Question

A manufacturer of tiling grout has supplied the following data: Kilograms produced and sold 420,000 Sales revenue $ 1,890,000 Variable manufacturing expense $ 948,000 Fixed manufacturing expense $ 242,000 Variable selling and administrative expense $ 341,000 Fixed selling and administrative expense $ 208,000 Net operating income $ 151,000 The company's contribution margin ratio is closest to:

Answer 1

Answer:

31.79%

Explanation:

Kilograms produced and sold = 420,000

Sales revenue = $ 1,890,000

Variable manufacturing expense = $ 948,000

Fixed manufacturing expense = $ 242,000

Variable selling and administrative expense = $ 341,000

Fixed selling and administrative expense = $ 208,000

Net operating income = $ 151,000

Total variable cost:

= Variable manufacturing expense + Variable selling and administrative expense

= $ 948,000 + $ 341,000

= $1,289,000

Contribution margin:

= Sales - Total variable cost

= $ 1,890,000 - $1,289,000

= $601,000

Contribution margin ratio:

= (Contribution ÷ sales) × 100

= ($601,000 ÷ $1,890,000) × 100

= 0.3179 × 100

= 31.79%