Question

If the contribution margin ratio for france company is 45%, sales were $425,000, and fixed costs were $100,000, what was the income from operations?
a. $191,250


b. $233,750


c. $133,750


d. $91,250

Answer 1

Answer:

d. $91,250

Explanation:

We can calculate variable costs by using the contribution margin ratio formula.

Contribution Margin Ratio= Sales revenue Less Variable Costs/Sales revenue

45%= $ 425,000- Variable Costs / $ 425,000

45% * $425,000= $ 425,000 -Variable Costs

$ 191250= $ 425,000- Variable Costs

Variable Costs = $ 425,000- $ 191250

Variable Costs = $ 233750

Sales $ 425,000

Variable Costs 233750

Fixed Costs= $ 100,000

Income from Operations= $ 91250