If Sales Are $820,000, Variable Costs Are 45% of Sales

question 4

Multiple Choice

If sales are $820,000, variable costs are 45% of sales, and operating income is $260,000, what is the contribution margin ratio?

• A) 45%
• B) 55%
• C) 62%
• D) 32%

---

Definitions:

Book

A written or printed work consisting of pages glued or sewn together along one side and bound in covers.

Profit-Maximizing

The process or strategy employed by a firm to adjust its production and prices to achieve the highest possible profit.

Price Elasticity

A quantitative representation of how quantity demanded or supplied of a product changes in response to a price change, signifying the sensitivity of consumers or producers to price variations.

Marginal Cost

The incremental cost of creating one more unit of a good or service.