Assignment: 21-2 Homework - Exercise 21-9 (Algorithmic) Contribution Margin Rati

Question

Assignment: 21-2 Homework - Exercise 21-9 (Algorithmic)

Contribution Margin Ratio

A. Bert Company budgets sales of $900,000, fixed costs of $46,600, and variable costs of $207,000. What is the contribution margin ratio for Bert Company? (Enter your answer as a whole number.)
% ___________

B. If the contribution margin ratio for Ernie Company is 42%, sales were $855,000, and fixed costs were $254,960, what was the income from operations?
$ __________

Contribution Margin Ratio

A. Bert Company budgets sales of $900,000, fixed costs of $46,600, and variable costs of $207,000. What is the contribution margin ratio for Bert Company? (Enter your answer as a whole number.)
% ___________

B. If the contribution margin ratio for Ernie Company is 42%, sales were $855,000, and fixed costs were $254,960, what was the income from operations?
$ __________

Explanation / Answer

a) Contribution margin= (Sales- Variable Cost)/ Sales

= (900,000-207,000)/900,000= 77%

b) 42/100= (855,000- VC)/855,000

variable cost= 855,000- 359,100= 495900

Income= sales - FC- VC= 855,000-254,960- 495900= 104140

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