Hollis Industries Produces Flash Drives for Computers, Which It Sells

question 121

Multiple Choice

Hollis Industries produces flash drives for computers, which it sells for $20 each.Each flash drive costs $12 of variable costs to make.During April, 1,000 drives were sold.Fixed costs for March were $2 per unit for a total of $1,000 for the month.How much is the contribution margin ratio?

• A)30%
• B)40%
• C)60%
• D)70%

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Definitions:

Monthly Fixed Costs

Regular, unchanging expenses incurred by a business each month regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Allocated

The process of distributing resources or costs among various departments, products, or activities based on specific criteria.

Raw Materials

Raw materials are basic, unprocessed inputs used in the manufacturing process to produce finished goods.

Allocated Rent

The portion of rental expenses assigned to different departments or business units within an organization, often based on space usage or other relevant criteria.