Question

If sales are $827,000, variable costs are 63% of sales, and operating income is $239,000, what is the contribution margin ratio?

a.37%
b.63%
c.41%
d.59%

Answer 1

The contribution margin ratio is 37%.

Step-by-step explanation:

To find the contribution margin ratio, we need to divide the contribution margin by the sales revenue. The contribution margin is the difference between sales revenue and variable costs. In this case, the variable costs are 63% of the sales, so the contribution margin ratio is 37% (100% - 63%). Therefore, the correct answer is a. 37%.