If Sales Are $200,000, Variable Costs Are 56% of Sales

question 47

Multiple Choice

If sales are $200,000, variable costs are 56% of sales, and operating income is $30,000, what is the contribution margin ratio?

• A) 42%
• B) 37%
• C) 44%
• D) 15%

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Definitions:

Utility Function

An economic model that describes how consumers rank different bundles or combinations of goods according to the level of satisfaction or utility they provide.

Equivalent Variation

A measure in economics that captures the change in wealth needed to maintain utility at a pre-change level after a price change.

Income

Money that an individual or business receives in exchange for providing labor, producing goods, or investing capital, over a certain period.

Utility Function

A mathematical representation that translates the satisfaction or happiness a consumer gains from consuming quantities of goods and services into a numerical value.