Question

Kite Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (3,000 units) $ 180,000 Variable expenses 108,000 Contribution margin 72,000 Fixed expenses 62,400 Net operating income $ 9,600 The contribution margin ratio is closest to:

Answer 1

40%

Step-by-step explanation:

Contribution margin = Contribution ÷ Sales × 100

= 72,000 ÷ $180,000 × 100

= 0.4 × 100

= 40%

Please not that other information given in the question are not relevant in arriving at the contribution margin ratio hence will be ignored.