A manufacturer of tiling grout has supplied the following dа ta:

Kilograms produced and sold 330,000

Sales revenue $1,920,000

Variable manufacturing expense $957,000

Fixed manufacturing expense $260,000

Variable selling and administrative expense $360,000

Fixed selling and administrative expense $226,000

Net operating income $117,000

The company's contribution margin ratio is closest to:

a. 50.2%

b. 81.3%

c. 31.4%

d. 74.7%

Question

Cannon Potts

Business

5 September, 23:41

A manufacturer of tiling grout has supplied the following dа ta:

Kilograms produced and sold 330,000

Sales revenue $1,920,000

Variable manufacturing expense $957,000

Fixed manufacturing expense $260,000

Variable selling and administrative expense $360,000

Fixed selling and administrative expense $226,000

Net operating income $117,000

The company's contribution margin ratio is closest to:

a. 50.2%

b. 81.3%

c. 31.4%

d. 74.7%

+1

Answers (1)

Know the Answer?

Kierra Rangel · Answer 1

c. 31.4%

Explanation:

As we know that

Contribution margin ratio is

= Contribution margin : Sales revenue * 100

where,

Contribution margin is

= Sales revenue - Variable manufacturing expense - Variable selling and administrative expense

= $1,920,000 - $957,000 - $360,000

= $603,000

And the sales revenue is $1,920,000

So, the ratio is

= $603,000 : $1,920,000 * 100

= 31.40%