Question

A cement manufacturer has supplied the following data: Tons of cement produced and sold 270,000 Sales revenue $ 974,000 Variable manufacturing expense $ 231,000 Fixed manufacturing expense $ 310,000 Variable selling and administrative expense $ 158,600 Fixed selling and administrative expense $ 92,000 Net operating income $ 182,400 The company's contribution margin ratio is closest to:

Answer 1

Contribution margin ratio= 0.598

Step-by-step explanation:

Giving the following information:

Selling price= 974,000/270,000= $3.61

Unitary manufacturing expense= 231,000/270,000= $0.86

Unitary variable selling and administrative= 158,600/270,000= $0.59

Total unitary variable cost= $1.45

To calculate the contribution margin ratio, we need to use the following formula:

Contribution margin ratio= (selling price - unitary variable cost) / selling price

Contribution margin ratio= (3.61 - 1.45) / 3.61

Contribution margin ratio= 0.598