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1 December, 22:16

The following information for the past year for the Blaine Corporation has been provided: Fixed costs: Manufacturing $115,000 Marketing 21,000 Administrative 16,000 Variable costs: Manufacturing $114,000 Marketing 23,000 Administrative 34,000 During the year, the company produced and sold 30,000 units of product at a selling price of $18.50 per unit. There was no beginning inventory of product at the beginning of the year. What is the contribution margin ratio for Blaine Corporation (round to 1 decimal) ?

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  1. 1 December, 22:25
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    Contribution margin ratio = 69.2 %

    Explanation:

    Contribution margin ratio is the percentage of sales revenue that is earned as contribution. Contribution is sales less variable cost

    Contribution margin ratio = ((Sales - variable cost) / Sales) * 100

    Contribution = sales less variable cost

    Sales revenue = (18.50 * 30,000) = 555,000

    Variable cost = 114,000 + 23,000 + 34,000 = 171,000

    Fixed cost = 115,000 + 21,000 + 16,000 = 152,000

    Contribution margin ratio

    = (555,000 - 171,000) / 555,000 * 100

    = 0.691 * 100

    = 69.2 %

    Contribution margin ratio = 69.2 %
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