Question

Spice Company has a product which sells for $ 170 and has a unit contribution margin of $ 55. It has fixed costs of $ 15​/unit at the current production volume. Spice​ Company's contribution margin ratio is_____________.

Answer 1

0.3235 or 32.35 %

Step-by-step explanation

Price per unit = $170

Contribution margin (Unit) = $55

Contribution margin (Unit)= Price per Unit - Variable Cost per unit

55 = 170 - VC

VC = $115 per Unit

Contribution Margin Ratio = (Sales – variable expenses) ÷ Sales

= (170 - 115) ÷ 170

= 0.3235 or 32.35 %