A cement manufacturer has supplied the following dа ta: Tons of cement produced and sold 270,000 Sales revenue $ 974,000 Variable manufacturing expense $ 231,000 Fixed manufacturing expense $ 310,000 Variable selling and administrative expense $ 158,600 Fixed selling and administrative expense $ 92,000 Net operating income $ 182,400 The company's contribution margin ratio is closest to:

Question

Cordell

Business

11 January, 16:37

A cement manufacturer has supplied the following dа ta: Tons of cement produced and sold 270,000 Sales revenue $ 974,000 Variable manufacturing expense $ 231,000 Fixed manufacturing expense $ 310,000 Variable selling and administrative expense $ 158,600 Fixed selling and administrative expense $ 92,000 Net operating income $ 182,400 The company's contribution margin ratio is closest to:

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Katelyn Leonard · Answer 1

Contribution margin ratio = 0.598

Explanation:

Giving the following information:

Selling price = 974,000/270,000 = $3.61

Unitary manufacturing expense = 231,000/270,000 = $0.86

Unitary variable selling and administrative = 158,600/270,000 = $0.59

Total unitary variable cost = $1.45

To calculate the contribution margin ratio, we need to use the following formula:

Contribution margin ratio = (selling price - unitary variable cost) / selling price

Contribution margin ratio = (3.61 - 1.45) / 3.61

Contribution margin ratio = 0.598