If sales are $812,000, variable costs are 60% of sales, and operating income is $200,000, what...

If sales are $812,000, variable costs are 60% of sales, and operating income is $200,000, what is the contribution margin ratio?

a.44% b.56% c.40% d.60%

Expert Solution

Solution:
	CALCULATION OF THE CONTRIBUTION
	Particulars	Amount

	Sales	$ 8,12,000
	Less: Variable Cost (60% of $ 812,000)	$ 4,87,200
	Contribution	$ 3,24,800

	Contribution Margin Ratio = (Contribution / Sales ) X 100
	Contribution Margin Ratio =
	Contribution=	$ 3,24,800
	Divide By	"/" By
	Sales	$ 8,12,000
	Equal to	0.40
	Multiply By	"X" By 100
	Equal to	40%

Answer = Option C = 40%

ekkarill92 answered 2 years ago

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