Sales Are $500,000 and Variable Costs Are $350,000

question 133

Multiple Choice

Sales are $500,000 and variable costs are $350,000. What is the contribution margin ratio?

• A) 43%
• B) 30%
• C) 70%
• D) Cannot be determined because amounts are not expressed per unit.

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Definitions:

Cash Account

An account where all transactions are made in cash, including receipts and payments.

Bank Reconciliation

Bank reconciliation is the process of matching the balances in an entity's accounting records for a cash account to the corresponding information on a bank statement, to ensure accuracy.

Internal Control

Strategies and methods adopted by a business to maintain the accuracy of its financial and accounting records, encourage responsibility, and deter dishonest practices.

Detection of Errors

The process of identifying and correcting mistakes in financial records or transactions.