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3 August, 16:25

Abby Cleaning Service had the following information for the 200 customers served this month: Sales Revenue $20,000 Variable Costs 8,000 What is the contribution margin ratio?

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  1. 3 August, 16:38
    0
    = 60%

    Explanation:

    Contribution ratio represents the marginal benefits of producing an extra unit. It is calculated by the formula.

    CM ration = Contribution margin / sales revenue

    Contribution margin = sales - varible costs

    therefore contribution margin ratio = sales - revenue / sales x 100

    =$20,000 - $ 8000 / 20,000 x 100

    = 12000/20000 x 100

    =0.6 x 100

    = 60%
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