Gibbs Company has a contribution margin of $150,000 and a contribution margin ratio of 30%. How much are total variable costs?
A) $45,000
B) $350,000
C) $105,000
D) $500,000

Question

Quizplus · Accepted Answer

The contribution margin ratio is the contribution margin divided by sales. If the contribution margin is $150,000 and the ratio is 30%, then sales are $150,000 / 0.30 = $500,000. Total variable costs are sales minus the contribution margin, which is $500,000 - $150,000 = $350,000.

Gibbs Company Has a Contribution Margin of $150,000 and a Contribution