Forward Company Makes and Sells Power Tools

question 112

Multiple Choice

Forward Company makes and sells power tools.The budgeted sales are $480,000, budgeted variable costs are $175,000, and budgeted fixed costs are $260,000.What is the budgeted contribution margin ratio? (Note: Round answer to two decimal places.)

• A) 35.64%
• B) 63.54%
• C) 54.45%
• D) 89.50%
• E) 50.20%

---

Definitions:

Accounts Receivable

Represents money owed to a business by its customers for goods or services delivered but not yet paid for, usually recoverable within a short period, like 30, 60, or 90 days.

Merchandise

Goods that are bought and sold within the retail industry.

Sales on Account

Transactions where goods or services are sold with the agreement that payment will be made at a later date, creating an account receivable.

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.