Young Company budgets sales of $112,900,000, fixed costs of $25,000,000, and variable costs of $66,611,000. What is the contribution margin ratio for Young Company? (Enter your answer as a whole number.) % b. If the contribution margin ratio for Martinez Company is 40%, sales were $34,800,000, and fixed costs were $1,500,000, what is the income from operations?

Question

Jacquelyn Hopkins

Business

13 November, 15:32

Young Company budgets sales of $112,900,000, fixed costs of $25,000,000, and variable costs of $66,611,000. What is the contribution margin ratio for Young Company? (Enter your answer as a whole number.) % b. If the contribution margin ratio for Martinez Company is 40%, sales were $34,800,000, and fixed costs were $1,500,000, what is the income from operations?

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Sparks · Answer 1

a. The contribution margin ratio will be 41%

b. The income from operations will be $12,420,000.

Explanation:

a. The sales are given at $112,900,000.

The fixed costs are $25,000,000.

The variable costs are $66,611,000.

The contribution margin will be

=Sales-variable costs

=$ (112,900,000-66,611,000)

=$46,289,000

The contribution margin ratio will be

= (Contribution margin/sales) * 100

= ($46,289,000 / $112,900,000) * 100

=41%

b. Now, if the contribution margin ratio is 40%.

The sales are given at $34,800,000.

The fixed costs are $1,500,000.

Income from operations or operating profit will be

= (sales*contribution margin ratio) - fixed cost

=$ (34,800,000*0.4) - $1,500,000

=$12,420,000