The year-to-date results at the end of month 9 included sales revenue of $3,600,000 and variable costs of $2,100,000. During month 10, sales revenue was $450,000 and variable costs were $270,000. What year-to-date contribution to sales ratio (C/S ratio) would be reported at the end of month 10?

Question

Quizplus · Accepted Answer

The contribution to sales ratio is calculated by dividing the contribution margin by the sales revenue. The contribution margin is the difference between sales revenue and variable costs. At the end of month 9, the contribution margin was $3,600,000 - $2,100,000 = $1,500,000. The sales revenue was $3,600,000. Therefore, the contribution to sales ratio was $1,500,000 / $3,600,000 = 41.67%. At the end of month 10, the contribution margin was $450,000 - $270,000 = $180,000. The sales revenue was $450,000. Therefore, the contribution to sales ratio was $180,000 / $450,000 = 40%. The year-to-date contribution to sales ratio would be the weighted average of the contribution to sales ratios for the first 9 months and the contribution to sales ratio for month 10. The weight for the first 9 months is 9/10 and the weight for month 10 is 1/10. Therefore, the year-to-date contribution to sales ratio would be (9/10 * 41.67%) + (1/10 * 40%) = 41.5%.

The Year-To-Date Results at the End of Month 9 Included