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Perfect fit company sells hand-sewn shirts for $40 per shirt. it incurs monthly fixed costs of $5,000. the contribution margin ratio is calculated to be 20%. what is the variable cost per shirt?
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Perfect fit company sells hand-sewn shirts for $40 per shirt. it incurs monthly fixed costs of $5,000. the contribution margin ratio is calculated to be 20%. what is the variable cost per shirt?

User Mushkie
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The variable cost per shirt is $32.
Solution: Contribution margin ratio 20%
Sales price per shirt $40 Contribution Margin = $40 x 20% =$8
Variable cost per shirt $32
Variable cost is a company expenses which varies on the production outputs.
User Ferdi
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