Contribution Margin Ratio, Variable Cost Ratio, Break-Even Sales Revenue The con

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Contribution Margin Ratio, Variable Cost Ratio, Break-Even Sales Revenue The controller of Ashton Company prepared the following projected income statement: Sales $88,000 Total variable cost 23,760 Contribution margin $64,240 Total fixed cost 43,800 Operating income $20,440 Required: 1. Calculate the contribution margin ratio. Note: Enter as a percent, rounded to the nearest whole number.
CH7 HW Contribution Margin Ratio, Variable Cost Ratio, Break-Even Sales Revenue The controller of Ashton Company prepared the following projected income statement: Sales Total variable cost $88,000 23,760 $64,240 43,800 $20,440 Contribution margin Total fixed cost Operating income Required 1. Calculate the contribution margin ratio. Note: Enter as a percent, rounded to the nearest whole number. 2. Calculate the variable cost ratio. Note: Enter as a percent, rounded to the nearest whole number 3. Calculate the break-even sales revenue for Ashton. Note: Round your answer to the nearest dollar Check My Work Previous Next

Explanation / Answer

1. contribution margin ratio= sales - variable cost /sales *100

= $88000 - $23760 / $88000 *100

= 73 %

2- variable cost ratio = total variable cost / sales * 100

= $ 23760 / $ 88000 *100

= 27 %

3. Break even sales revenue = fixed expenses / contribution margin ratio

= $ 43800 / 73%

= $ 60000

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