Question

Forward Company makes and sells power tools. The budgeted sales are $480,000, the budgeted variable costs are $175,000, and the budgeted fixed costs are $260,000. What is the budgeted percentage contribution margin ratio? (Note: Round your answer to two decimal places.)

Answer 1

63.54% (Approx)

Step-by-step explanation:

The computation of the budgeted percentage contribution margin ratio is shown below:-

For computing the contribution margin ratio firstly we need to calculate the contribution margin in dollars

Contribution margin = Sales - Variable cost

= ($480,000 - $175,000)

= $305,000

Contribution margin ratio = Contribution margin ÷ Sales

= ($305,000 ÷ $480,000)

= 63.54% (Approx)