Question

If the monthly sales volume required to break even is $190,000 and monthly fixed costs are $55,900, the contribution margin ratio is closest to: Select one: a. 29% b. 71% c. 340% d. 23%

Answer 1

Answer:

a. 29%

Explanation:

Given that

Contribution margin = $55,900

Sales = $190,000

The computation of contribution margin ratio is shown below:-

Contribution margin ratio = Contribution margin ÷ Sales

= $55,900 ÷ $190,000

= 29%    

Therefore for computing the contribution margin ratio we simply divide sales by contribution margin ratio.