The Hamilton Company has provided the following income statement for 2008: $\begin{array}{ll}
\text { Sales }(24,000 \text { units) } & \$ 440,000 \
\text { Variable expenses } & 275,000\
\text { Contribution margin } & 165,000 \
\text { Fixed expenses } & 98,000\
\text { Net Income } &\$67,000
\end{array}$ The company's contribution margin ratio (rounded) is:

Question

Quizplus · Accepted Answer

The contribution margin ratio is calculated by dividing the contribution margin by sales. In this case, the contribution margin is $165,000 and sales are $440,000. Therefore, the contribution margin ratio is $165,000/$440,000 = 0.375, or 37.5%.

The Hamilton Company Has Provided the Following Income Statement for 2008