Question

Bramble Corp. produces flash drives for computers, which it sells for $10 each. Each flash drive costs $7 of variable costs to make. During April, 1000 drives were sold. Fixed costs for April were $1000. How much is the contribution margin ratio?

Answer 1

Answer:

30%

Explanation:

Data provided

Sales = $10

Drive cost = $7

The computation of contribution margin ratio is shown below:-

Contribution margin ratio = Contribution ÷ Sales × 100

= ($10 - $7) ÷ $10 × 100

= $3 ÷ $10 × 100

= 0.3 × 100

= 30%

Therefore for computing the contribution margin ratio we simply applied the above formula.