Question

Bryce co. sales are $914,000, variable costs are $498,130, and operating income is $196,000. what is the contribution margin ratio?
a. 45.5%
b. 52.2%
c. 28.4%
d. 54.5%

Answer 1

The correct answer is A) 45.5%.

To calculate the contribution margin you subtract the sales and the variable costs:

914000-498130 = 415870

This is the contribution margin.

To find the ratio, divide this amount by the sales:

415870/914000 = 0.455 = 45.5%