Misa Corporation manufactures circuit boards and is in the process of preparing next year's budget.The pro forma income statement for the current year is presented below. The contribution margin ratio for the current year is:
A)53.6%.
B)49.3%.
C)46.4%.
D)25%.

Question

Misa Corporation manufactures circuit boards and is in the process of preparing next year's budget.The pro forma income statement for the current year is presented below.  The contribution margin ratio for the current year is:
A)53.6%. 
B)49.3%. 
C)46.4%. 
D)25%.

Quizplus · Accepted Answer

The contribution margin ratio can be calculated by dividing the contribution margin by sales. From the pro forma income statement, we can see that the contribution margin for the current year is $1,967,000 ($5,300,000 - $3,333,000). The sales for the current year are $10,000,000. Therefore, the contribution margin ratio for the current year is 19.67% ($1,967,000 ÷ $10,000,000) or 49.3% when converted to a percentage.

Misa Corporation Manufactures Circuit Boards and Is in the Process