Sales (50,000 units) $1,000,000, direct materials and direct labor $500,000, other variable costs $50,000, and fixed costs $180,000. What is Boswell contribution margin ratio?
A) 68%.
B) 45%.
C) 32%.
D) 55%.

Question

Quizplus · Accepted Answer

Contribution margin = Sales - (Direct materials + Direct labor + Other variable costs) = $1,000,000 - ($500,000 + $50,000) = $450,000
Contribution margin ratio = Contribution margin / Sales = $450,000 / $1,000,000 = 0.45 or 45%.

Sales (50,000 Units) $1,000,000, Direct Materials and Direct Labor $500,000