Calculate the Contribution Margin Ratio of a Company with Sales

question 34

Multiple Choice

Calculate the contribution margin ratio of a company with sales of $180,000 and operating income of $37,000.Variable costs of the company are 52% of sales.

• A) 41%
• B) 48%
• C) 36%
• D) 24%

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Definitions:

Gross Profit

The difference between total revenue and the cost of goods sold, before deducting any selling, administrative, or other expenses.

Gross Profit

The difference between sales revenue and the cost of goods sold, before deducting overheads, salaries, and other operating expenses.

Stockholders' Equity

The residual interest in the assets of an entity that remains after deducting its liabilities.

Nonoperating Items

Income and expenses that are not related to the core operations of a business, such as gains or losses from investments or interest expense.