Dakota Company provides the following information about its single product:
$$\begin{array} {| l | r | }
\hline \text { Targeted aperating income } & \$ 40,000 \
\hline \text { Selling price per unit } & \$ 3.50 \
\hline \text { Variable cost per unit } & \$ 1.05 \
\hline \text { Total fixed costs } & \$ 90,000 \
\hline
\end{array}$$
What is the contribution margin ratio?

Question

Dakota Company provides the following information about its single product:
$$\begin{array} {| l | r | } 
\hline \text { Targeted aperating income } & \$ 40,000 \
\hline \text { Selling price per unit } & \$ 3.50 \
\hline \text { Variable cost per unit } & \$ 1.05 \
\hline \text { Total fixed costs } & \$ 90,000 \
\hline
\end{array}$$
What is the contribution margin ratio?

Quizplus · Accepted Answer

Contribution margin ratio = (Selling price per unit - Variable cost per unit) / Selling price per unit= ($3.50 - $1.05) / $3.50= $2.45 / $3.50= 0.70

Dakota Company Provides the Following Information About Its Single Product