Peeler's Smoothie Company Has Provided the Following Information Calculate the Contribution Margin Ratio

question 161

Multiple Choice

Peeler's Smoothie Company has provided the following information: $$\begin{array} { | l | r | } \hline \text { Sales price per unit } & \$ 5.50 \\\hline \text { Variable cost per unit } & \$ 2.50 \\\hline \text { Fixed costs per month } & \$ 1000 \\\hline\end{array}$$ Calculate the contribution margin ratio.(Round your answer to two decimal places.)

• A) 120%
• B) 20%
• C) 45.45%
• D) 54.55%

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Definitions:

Variable Factory Overhead

Costs in manufacturing that fluctuate with the level of production, such as utilities or materials.

Direct Materials

Raw materials that are directly incorporated into a finished product and can easily be traced to the product.

Quantity Variance

The difference between the expected and actual quantities of inputs used in the production process, affecting the cost of goods sold.

Price Variance

The difference between the actual cost of a good or service and its expected or budgeted cost.