Kaprelian Company sells desks at $480 per desk.The variable costs are $300 per desk.Total fixed costs for the period are $400,000.The contribution margin ratio is ________.
A) 22.5%
B) 37.5%
C) 40.6%
D) 62.5%

Question

Quizplus · Accepted Answer

Contribution margin per desk = selling price per desk - variable cost per desk
Contribution margin per desk = $480 - $300 = $180

Contribution Margin Ratio = (Contribution Margin / Sales) x 100
Contribution Margin Ratio = ($180 / $480) x 100
Contribution Margin Ratio = 37.5%

Therefore, the contribution margin ratio is 37.5%.

Kaprelian Company Sells Desks at $480 Per Desk