Gnat Company,a producer of electronic devices,has the following information:
$\begin{array} { l }
\text {Selling price per unit }& \$5.00\
\text { Variable cost per unit}&\$3.00 \
\text { Total fixed costs}&\$900,000.00 \
\end{array}$

The contribution-margin ratio is ________.
A) 30%
B) 40%
C) 60%
D) 100%

Question

Gnat Company,a producer of electronic devices,has the following information:
$\begin{array} { l  }
 \text {Selling price per unit }& \$5.00\
 \text { Variable cost per unit}&\$3.00 \
 \text { Total fixed costs}&\$900,000.00 \
\end{array}$

The contribution-margin ratio is ________.
A) 30%
B) 40%
C) 60%
D) 100%

Quizplus · Accepted Answer

Contribution margin ratio = (Selling price per unit - Variable cost per unit) / Selling price per unit= ($5.00 - $3.00) / $5.00= $2.00 / $5.00= 0.40 or 40%

Gnat Company,a Producer of Electronic Devices,has the Following Information The Contribution-Margin Ratio Is ________