Sutton Company Produces Flash Drives for Computers, Which It Sells

question 92

Multiple Choice

Sutton Company produces flash drives for computers, which it sells for $20 each.Each flash drive costs $6 of variable costs to make.During April, 1,000 drives were sold.Fixed costs for April were $2 per unit for a total of $2,000 for the month.How much is the contribution margin ratio?

• A)30%
• B)40%
• C)60%
• D)70%

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Definitions:

Stockholders' Equity

The ownership interest of shareholders in a corporation, calculated as total assets minus total liabilities.

Contributions

Monetary or other forms of aid provided by donors to organizations which could include grants, donations, or specific asset gifts.

Shareholders

Individuals or entities that own shares in a corporation, giving them partial ownership and rights to profits.

Issuing Stock

The process by which a company sells new shares to investors to raise capital.