Question

Compute and interpret the contribution margin ratio using the following data: sales, $6,000; total variable cost, $3,000.

Answer 1

The contribution margin ratio is 0.5

Step-by-step explanation:

In order to calculate the contribution margin ratio we will use the formula

(Sales- Variable cost)/Sales=Contribution margin ratio

Sales = 6,000

Variable cost = 3,000

We will input these values in the formula.

(6,000-3,000)/6,000=3,000/6,000=0.5