If Sales Are $525,000, Variable Costs Are 53% of Sales

question 179

Multiple Choice

If sales are $525,000, variable costs are 53% of sales, and operating income is $50,000, what is the contribution margin ratio?

• A) 47%
• B) 26.5%
• C) 9.5%
• D) 53%

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Definitions:

Defensive Medicine

The practice by healthcare providers of ordering tests, procedures, or visits, or avoiding certain high-risk patients or procedures, primarily to avoid litigation, rather than to benefit the patient's health.

Medical Lawsuits

Medical lawsuits involve legal actions taken against medical practitioners or healthcare organizations due to negligence, malpractice, or failure to provide the expected standard of care.

Allocative Inefficiency

A situation where resources are not allocated in the most efficient manner, leading to a loss in potential economic welfare or output.

Managed-Care Systems

Health care delivery systems designed to manage cost, utilization, and quality, often using a network of doctors and providers to ensure care is delivered efficiently.