Question

Wang Co. manufactures and sells a single product that sells for $450 per unit; variable costs are $270 per unit. Annual fixed costs are $800,000. Current sales volume is $4,200,000. Compute the contribution margin ratio.

Answer 1

contribution margin ratio= 0.4

Step-by-step explanation:

Giving the following information:

Selling price per unit= $450

Unitary variable costs=$270

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

contribution margin ratio= contribution margin/selling price

contribution margin ratio= (450 - 270) / 450

contribution margin ratio= 0.4