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22 July, 02:22

Assume fixed costs total $180,000 per month, the variable cost per unit is $70, and each unit sells for $160. What is the contribution margin ratio (rounded) ?

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  1. 22 July, 02:26
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    56.25%

    Explanation:

    The difference between a company's sales and variable expenses which is expressed as a percentage is the contribution margin ratio.

    Mathematically, contribution margin ratio is:

    (Sales - variable cost) / sales

    Using the values in the question:

    (160 - 70) / 160 = 90/160 = 0.5625 = 56.25%
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