Kelchner Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. The contribution margin ratio is closest to:

Question

Kelchner Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.  The contribution margin ratio is closest to:

Quizplus · Accepted Answer

The contribution margin ratio is calculated by dividing the total contribution margin by total sales revenue. In this case, total contribution margin is $198,000 ($495,000 - $297,000) and total sales revenue is $495,000. Therefore, the contribution margin ratio is 40.0% ($198,000/$495,000). Therefore, the closest answer is B) 40%.

Kelchner Corporation Has Provided the Following Contribution Format Income Statement