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

ID: 2552797 • Letter: C

Question

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

The controller of Sandoval Company prepared the following projected income statement:

1. Calculate the contribution margin ratio. Round your answer to the nearest whole number.

2. Calculate the variable cost ratio. Round your answer to the nearest whole number.

3. Calculate the break-even sales revenue for Sandoval. If required, round your answer to nearest dollar.

Sales $90,000 Total Variable cost 71,000 Contribution margin $19,000 Total Fixed cost 7,400 Operating income $11,600

1.contribution margin ratio=contribution margin/sales

=(19000/90000)=21%(Approx)

2.Variable cost ratio=Variable cost/sales

=(71000/90000)=79%(Approx)

3.Breakeven=Fixed cost/contribution margin ratio

=(7400/0.21)=35053(Approx)(Please note that intermediate calculations have not been rounded off.

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