Evergreen Corporation Manufactures Circuit Boards and Is in the Process

question 58

Multiple Choice

Evergreen Corporation manufactures circuit boards and is in the process of preparing next year's budget. The pro forma income statement for the current year is presented below.
$\begin{array}{lr}\text {Sales}&&\$3,500,000\\\text {Cost of sales:}\\\text { Direct Material } & \$ 500,000 \\\text { Direct labor } & 250,000 \\\text { Variable Overhead } & 275,000 \\\text { Fixed Overhead } & 600,000&1,625,000\\\text { Gross Profit}&&\$1,875,000\\\text { Selling and General \& Admin. Exp.}\\\text { Variable}&750,000 \\\text { Fixed}&250,000&1,000,000\\\text { Operating Income }&&\$875,000\end{array}$
-
The contribution margin ratio for the current year is:

• A) 53.6%.
• B) 49.3%.
• C) 46.4%.
• D) 25%.

---

Definitions:

Civil Service Reform Act

Legislation intended to improve the quality of public service by structuring federal employment on merit and performance rather than political affiliation.

Spoils System

A practice where a political party, after winning an election, gives government jobs to its supporters, friends, and relatives as a reward.

Federal Civil Service

Employment sector composed of federal government employees who are appointed based on merit rather than political affiliation.

Federal Bureaucracy

The collection of government agencies and departments that carry out policies and administer public programs at the national level.