Question

Clark Company produces flash drives for computers, which it sells for $20 each. Each flash drive costs $12 of variable costs to make. During April, 1,000 drives were sold. Fixed costs for March were $2 per unit for a total of $1,000 for the month. How much is the contribution margin ratio

Answer 1

Answer:

contribution margin ratio= 0.4

Explanation:

Giving the following information:

Selling price per unit= $20

Unitary variable cost= $12

To calculate the contribution margin ratio, we need to use the following formula:

contribution margin ratio= (selling price - unitary variable cost) / selling price

contribution margin ratio= (20 - 12) / 20

contribution margin ratio= 0.4