Question

A cement manufacturer has supplied the following data: Tons of cement produced and sold 315,000 Sales revenue $ 1,019,000 Variable manufacturing expense $ 240,000 Fixed manufacturing expense $ 337,000 Variable selling and administrative expense $ 167,600 Fixed selling and administrative expense $ 101,000 Net operating income $ 173,400 The company's contribution margin ratio is closest to:

Answer 1

Answer:

60%

Explanation:

Calculation for what The company's contribution margin ratio is closest to

First step is to calculate the Total variable cost using this formula

Total variable cost=Variable manufacturing expense+Variable selling and administrative expense

Let plug in the formula

Total variable cost=$ 240,000+$ 167,600

Total variable cost=$407,600

Second step is to calculate the Contribution margin using this formula

Contribution margin=Sales-Variable cost

Let plug in the formula

Contribution margin=$ 1,019,000 -$407,600

Contribution margin= $611,400

Now let calculate the Contribution margin ratio using this formula

Contribution margin ratio=Contribution margin/Sales

Let plug in the formula

Contribution margin ratio=$611,400/$ 1,019,000

Contribution margin ratio=0.6*100

Contribution margin ratio=60%

Therefore The company's contribution margin ratio is closest to 60%