Question

A cement manufacturer has supplied the following data: Tons of cement produced and sold 275,000 Sales revenue$979,000 Variable manufacturing expense$232,000 Fixed manufacturing expense$313,000 Variable selling and administrative expense$110,650 Fixed selling and administrative expense$93,000 Net operating income$230,350 The company's contribution margin ratio is closest to: Multiple Choice 44.3% 65.0% 68.0% 23.5%

Answer 1

65%

Step-by-step explanation:

Given that

Sales = $979,000

Variable manufacturing expense = $232,000

Variable selling and administrative expense = $110,650

The computation of contribution margin ratio is shown below:-

Contribution margin ratio = (Sales - Variable manufacturing expense - Variable selling and administrative expense) × 100 ÷ Sales

= ($979,000 - $232,000 - $110,650) × 100 ÷ $979,000

= ($979,000 - $342,650) × 100 ÷ $979,000

= $636,350 × 100 ÷ $979,000

= 65%