Paco's Bikes sells 120 bicycles each month for $400 per unit.Variable cost per unit is $160 and fixed costs total $4,800 per month.What is the contribution margin ratio?
A)0.40
B)0.60
C)2.50
D)0.70
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

The contribution margin ratio is calculated as (Selling Price per Unit - Variable Cost per Unit) / Selling Price per Unit. Here, it's ($400 - $160) / $400 = $240 / $400 = 0.60.

Paco's Bikes Sells 120 Bicycles Each Month for $400 Per