If sales are $797,000, variable costs are 70% of sales, and operating income is $265,000, what...

Question

Question

If sales are $797,000, variable costs are 70% of sales, and operating income is $265,000, what is the contribution margin ratio?

a.66%

b.30%

c.34%

d.70%

Answer 1

Answer #1

Sales = $797,000

Variable costs = 70 % of sales

Variable costs = $797,000 * 70% = $557,900

Contribution Margin = Sales - Variable cost = $797,000 - $557,900

Contribution Margin = $239,100

Contribution Margin ratio = Contribution Margin / Sales

Contribution Margin ratio = $239,100 / $797,000

Contribution Margin ratio = 30%

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Answer 2

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