Question

The following information for the past year for the Blaine Corporation has been provided: Fixed costs: ​ Manufacturing $115,000​ Marketing 21,000​ Administrative 16,000​ Variable costs: ​ Manufacturing $114,000​ Marketing 23,000​ Administrative 34,000​During the year, the company produced and sold 30,000 units of product at a selling price of $18.50 per unit. There was no beginning inventory of product at the beginning of the year. What is the contribution margin ratio for Blaine Corporation (round to 1 decimal)?

Answer 1

Contribution margin ratio = 69.2 %

Step-by-step explanation:

Contribution margin ratio is the percentage of sales revenue that is earned as contribution. Contribution is sales less variable cost

Contribution margin ratio =( (Sales - variable cost)/ Sales ) × 100

Contribution = sales less variable cost

Sales revenue = (18.50× 30,000) = 555,000

Variable cost = 114,000​+ 23,000 +34,000 = 171,000

Fixed cost = 115,000 +21,000 + 16,000 = 152,000

Contribution margin ratio

=(555,000 - 171,000)/555,000 × 100

= 0.691 × 100

= 69.2 %

Contribution margin ratio = 69.2 %