Question

Zeke Company sells 26,900 units at $16 per unit. Variable costs are $9 per unit, and fixed costs are $38,100. The contribution margin ratio and the unit contribution margin, respectively, are

Answer 1

Answer:

Contribution margin ratio= 0.4375

Contribution margin= $7

Explanation:

Giving the following information:

Zeke Company sells 26,900 units at $16 per unit. Variable costs are $9 per unit, and fixed costs are $38,100.

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

Contribution margin= selling price - unitary variable cost

Contribution margin= 16 - 9= $7

Now, we can calculate the contribution margin ratio:

Contribution margin ratio= contribution margin/ selling price

Contribution margin ratio= 7/16

Contribution margin ratio= 0.4375