Kingston Company Sells Its Product for $200 Per Unit What Is Kingston Company's Contribution Margin Ratio?
A) 30%
B)

question 13

Multiple Choice

Kingston Company sells its product for $200 per unit.The company's accountant provided the following cost information: $$\begin{array} { l l l } \text { Manufacturing costs } & \$ 25,000 + 40 \% \text { of sales } \\\text { Selling costs } & \$ 10,000 + 20 \% \text { of sales } \\\text { Administrative costs } & \$ 15,000 + 10 \% \text { of sales }\end{array}$$ What is Kingston Company's contribution margin ratio?

• A) 30%
• B) 15%
• C) 35%
• D) 20%

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Definitions:

Indirect Labor

Labor costs not directly tied to the production of goods or services, such as salary of supervisory staff.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life to reflect its decrease in value over time.

Store Equipment

Fixed assets specifically purchased for use in a retail store setting, such as shelving, cash registers, and display units.

Raw Materials

Basic materials that are used in the initial stages of the production process, which will be transformed into finished goods.