Assume That the Following Information Was Available for Daylight Enterprises,Inc

question 38

Multiple Choice

Assume that the following information was available for Daylight Enterprises,Inc.Which of the following statements is(are) true with regard to contribution margin ratio?
$$\begin{array} { | l | c | c | r | } \hline & \begin{array} { c } \text { Ceiling } \\\text { Lights }\end{array} & \begin{array} { c } \text { Tabletop } \\\text { Lights }\end{array} & \begin{array} { c } \text { Stand-Alone } \\\text { Lights }\end{array} \\\hline \text { Sales } & \$ 350,000 & \$ 175,000 & \$ 440,000 \\\hline \text { Variable expenses } & & & \\\hline \text { Variable production } & \$ 70,000 & \$ 19,250 & \$ 90,000 \\\hline \text { Variable advertising } & \$ 10,500 & \$ 3,500 & \$ 22,000 \\\hline \text { Variable shipping } & \$ 12,000 & \$ 14,000 & \$ 28,000 \\\hline\end{array}$$

• A) Tabletop lights has the lowest contribution margin ratio.
• B) Ceiling lights has the highest contribution margin ratio.
• C) Ceiling lights has the lowest contribution margin ratio.
• D) Stand-alone lights has the highest contribution margin ratio.
• E) Tabletop lights has the highest contribution margin ratio.

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Definitions:

Variable Overhead Rate

The portion of overhead costs that varies directly with production volume, calculated as variable overhead costs divided by a certain measure of activity (e.g., labor hours or machine hours).

Fixed Manufacturing Overhead

Indirect production costs that remain constant regardless of the level of production, such as salaries, rent, and insurance.

Master Budget

A comprehensive financial plan made up of several individual budgets that represent the company's operations and financial goals for a specific period.

Product

An item or service created through a process of manufacturing or production, intended for sale or use by consumers.