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

Question

Quizplus · Accepted Answer

The contribution margin ratio is the contribution margin divided by sales. Given a contribution margin ratio of 45%, fixed costs of $50,000, and a profit of $40,000, the contribution margin must be $90,000 ($40,000 profit + $50,000 fixed costs). Therefore, sales revenue is $90,000 / 0.45 = $200,000.

Rodeo,IncHas a Contribution Margin Ratio of 45