if a company had a co trinution margin of 100000 and a contribution ratio of 40%

Question

if a company had a co trinution margin of 100000 and a contribution ratio of 40% total variable costs must have been

if a company had a co trinution margin of 100000 and a contribution ratio of 40% total variable costs must have been

if a company had a co trinution margin of 100000 and a contribution ratio of 40% total variable costs must have been

if a company had a co trinution margin of 100000 and a contribution ratio of 40% total variable costs must have been

if a company had a co trinution margin of 100000 and a contribution ratio of 40% total variable costs must have been

Explanation / Answer

contrinution margin = $ 100,000

Contribution Margin ratio = 40%

Hence, Variable Cost = 60%

Contribution Margin ratio = Contribution Margin / Sales

40% = $ 100,000 / Sales

Sales = 250,000

Hence, Variable Cost = Sales * 60%

= $ 250,000 * 60%

= $ 150,000

Hence the correct answer is $ 150,000

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