Kingston Company sells its product for $200 per unit.The company's accountant provided the following cost information: $$\begin{array} { l l l }
\text { Manufacturing costs } & \$ 25,000 + 40 \% \text { of sales } \
\text { Selling costs } & \$ 10,000 + 20 \% \text { of sales } \
\text { Administrative costs } & \$ 15,000 + 10 \% \text { of sales }
\end{array}$$ What is Kingston Company's contribution margin ratio?
A) 30%
B) 15%
C) 35%
D) 20%

Question

Kingston Company sells its product for $200 per unit.The company's accountant provided the following cost information: $$\begin{array} { l l l } 
\text { Manufacturing costs } & \$ 25,000 + 40 \% \text { of sales } \
\text { Selling costs } & \$ 10,000 + 20 \% \text { of sales } \
\text { Administrative costs } & \$ 15,000 + 10 \% \text { of sales }
\end{array}$$ What is Kingston Company's contribution margin ratio?
A) 30%
B) 15%
C) 35%
D) 20%

Quizplus · Accepted Answer

The contribution margin ratio is calculated by subtracting the variable costs from the sales price and then dividing by the sales price. Here, variable costs are 40% (manufacturing) + 20% (selling) + 10% (administrative) = 70% of sales. Thus, the contribution margin ratio is 100% - 70% = 30%.

Kingston Company Sells Its Product for $200 Per Unit What Is Kingston Company's Contribution Margin Ratio? A) 30% B)

Kingston Company Sells Its Product for $200 Per Unit What Is Kingston Company's Contribution Margin Ratio?
A) 30%
B)