Question

If sales are $820,000, variable costs are 58% of sales, and operating income is $260,000, what is the contribution margin ratio

Answer 1

the contribution margin ratio is 42%

Step-by-step explanation:

The contribution margin ratio is

= Sales ratio - variable cost ratio

= 100% - 58%

= 42%

As the sales comes by adding the variable cost and the contribution margin

So we takes the sales ratio be 100% so that the contribution margin ratio would come

hence, the contribution margin ratio is 42%

The same is to be considered