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29 December, 20:32

The world's foremost cement manufacturer, GPB Inc., has supplied the following dа ta: Tons of cement produced and sold 680,000 Sales revenue $ 2,878,000 Variable manufacturing expense $ 1,156,000 Fixed manufacturing expense $ 760,000 Variable selling and administrative expense $ 227,000 Fixed selling and administrative expense $ 294,000 Net operating income $ 306,000

Calculate the company's contribution margin ratio

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  1. 29 December, 20:44
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    51.95%

    Explanation:

    Contribution margin ratio shows the contribution margin as percentage of sales.

    Contribution margin is the total sales minus variable cost.

    variable costs=variable manufacturing expense+variable selling and administrative expense

    variable costs=$1,156,000+$227,000=$ 1,383,000.00

    contribution margin = $2,878,000-$ 1,383,000=$1,495,000

    contribution margin ratio=contribution margin / sales

    =$ 1,495,000.00/$2,878,000 = 51.95%

    The company contribution's margin ratio is 51.95%

    This implies that contribution is more than half of sales revenue.
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