Question

The Halpert Group produces a single product selling for $ 20 per unit. Variable costs are $ 2 per unit and total fixed costs are $ 10,000. What is the contribution margin​ ratio?

Answer 1

90 percent

Step-by-step explanation:

Given that,

Selling price per unit = $20

Variable costs per unit = $2

Total fixed cost = $10,000

Contribution margin = Selling price per unit - Variable cost per unit

= $20 - $2

= $18

Contribution margin​ ratio:

= (Contribution margin ÷ Selling price) × 100

= ($18 ÷ $20) × 100

= 0.9 × 100

= 90 percent.

Therefore, the contribution margin ratio is 90%.