Question

Sherman Company provides carpet cleaning services to commercial and residential customers. The commercial business segment provided services to 200 customers. The residential business segment provided services to 400 customers. Using the data​ below, determine the average amount Sherman Company charged each type of customer for​ services, the average variable cost per​ customer, and the average contribution margin per​ customer, rounded to two decimal places. What caused the difference in contribution margin in the two​ segments?

Answer 1

Step-by-step explanation:

Contribution Margin Ratio

Contribution margin ratio is the percentage of contribution margin to the total sales; where contribution margin is the value left after deducting all the variable expenses from the sale revenue.

Contribution margin ratio is calculated by dividing contribution margin by sale value.

Contributing margin ratio = contributing ratio / sale value