Question

A manufacturer of tiling grout has supplied the following data: Kilograms produced and sold 480,000 Sales revenue $ 1,830,000 Variable manufacturing expense $ 942,000 Fixed manufacturing expense $ 230,000 Variable selling and administrative expense $ 358,000 Fixed selling and administrative expense $ 196,000 Net operating income $ 104,000 The company's contribution margin ratio is closest to:

Answer 1

$28.96%

Step-by-step explanation:

Given the above information, we would calculate first the total variable cost

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

= $942,000 + $358,000

= $1,300,000

The next is to compute the contribution margin

Contribution margin = Sales - Total variable cost

= $1,830,000 - $1,300,000

= $530,000

Therefore,

Contribution margin ratio = (Contribution margin / Sales) × 100

= ($530,000 / $1,830,000) × 100

= 28.96%