You are provided with a simple income statement for May for Supreme Shoes. Calcu

Question

You are provided with a simple income statement for May for Supreme Shoes. Calculate the company's contribution margin ratio



Supreme Shoes, Inc
Income Statement
31-May-07
Revenue $3,000,000

Costs:
Production workers wages $500,000
Factory Depreciation and Maintenance $245,000
Metal, rubber, etc. $295,000
Electricity, water for factory ( Amounts change with production volume) $195,000
Equipment Depreciation and Maintenance $175,000

Net Income $1,590,000




Express your answer in decimal form and round your answer to two decimal places.

Explanation / Answer

The answer is .61 evidenced as follows: Revenue 3,000,000 Variable Costs: Production Wages 500,000 Metal/Rubber 295,000 Factory Electric/Water 195,0000 Equipment Depr and Maint 175,000 Total Variable Costs 1,165,000 Contribution Margin 1,835,000 (Revenue less Variable Costs) Contribution Margin Ratio = .61 (.61166667 rounded) = C/M divided by Revenue Cross Check: Net Income 1,590,000 + Fixed Costs 245,000 + Variable Costs 1,165,000 = Revenue 3,000,000 Hope this helps! Good Luck!

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.