If Selling Price Is $100 Per Unit, Variable Cost Is

question 38

Multiple Choice

If selling price is $100 per unit, variable cost is $70 per unit, and fixed cost is $200, calculate the contribution margin ratio.

• A)14%
• B)30%
• C)200%
• D)50%

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Definitions:

Discounting

The process of determining the present value of a future amount of money or stream of cash flows given a specific rate of return.

Compounded Annually

Interest on an investment that is calculated once a year on both the initial principal and the accumulated interest from previous periods.

Compounded Monthly

A method of calculating interest where the interest earned each month is added to the principal, so that the balance grows at an increasing rate.

Compounded Annually

A method of calculating interest in which the accumulated interest is added to the principal at the end of each year, resulting in interest on interest in successive years.