If Sales Are $914,000, Variable Costs Are $498,130, and Operating

question 9

Multiple Choice

If sales are $914,000, variable costs are $498,130, and operating income is $260,000, what is the contribution margin ratio?

• A) 52.2%
• B) 28.4%
• C) 54.5%
• D) 45.5%

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Factory Equipment

Assets such as machinery and tools that are used in the production process within a manufacturing or production facility.

Factory Overhead

The indirect costs associated with manufacturing, including utilities, maintenance, and management salaries, but not including raw materials or direct labor.

Work in Process

Inventory that includes materials that have been partially processed but are not yet finished goods in the manufacturing process.