Rodeo,Inc.has a contribution margin ratio of 45%.This month,profit was $40,000 and fixed costs were $50,000.How much was Rodeo's sales revenue?
A)$40,500
B)$90,000
C)$111,111
D)$200,000

Question

Quizplus · Accepted Answer

The contribution margin ratio is 45%, meaning 45% of sales revenue contributes to covering fixed costs and profit. Let sales revenue be X. Then, 0.45X = $40,000 (profit) + $50,000 (fixed costs). Solving for X gives X = $200,000.

Rodeo,IncHas a Contribution Margin Ratio of 45