Question

produces sports socks. The company has fixed expenses of $ 90 comma 000$90,000 and variable expenses of $ 0.90$0.90 per package. Each package sells for $ 1.80$1.80. Read the requirementsLOADING.... Requirement 1. Compute the contribution margin per package and the contribution margin ratio. Begin by identifying the formula to compute the contribution margin per package. Then compute the contribution margin per package. ​(Enter the amount to the nearest​ cent.) Fixed costs – Operating income = Contribution margin per unit

Answer 1

The contribution margin and the contribution ratio is $0.90 and 50% respectively.

Step-by-step explanation:

The formula to compute contribution margin per package is shown below:

Contribution margin = Selling price per package - variable expense per package

= $1.80 - $0.90

= $0.90

And, the formula to compute contribution ratio is shown below:

= (Contribution per package ÷ selling price per package) × 100

= ($0.90 per package) ÷ ($1.80 per package) × 100

= 50%