Sweet Treats sells ice cream cones for $4.25 per customer. Variable costs are $1.25 per cone. Fixed costs are $3300 per month. What is the company's contribution margin ratio?

Question

Quizplus · Accepted Answer

Contribution Margin Ratio = (Selling Price - Variable Costs) / Selling Price
= (4.25 - 1.25) / 4.25
= 3 / 4.25
= 70.59% 
Therefore, the company's contribution margin ratio is 70.59%. Option D is the correct answer.

Sweet Treats Sells Ice Cream Cones for $4