Jack's Toys sells kites for $40 each. Variable costs are $4 per kite. Fixed costs are $2400 per month. What is the contribution margin ratio for the kites?

Name: Jack's Toys sells kites for $40 each. Variable costs are $4 per kite. Fixed costs are $2400 per month. What is the contribution margin ratio for the kites?
Brand: Quizplus
Rating: 4.8 (54 reviews)

Question

Quizplus · Accepted Answer

Contribution margin ratio = (Selling price - Variable cost) / Selling price
= ($40 - $4) / $40
= 0.9 or 90%
Therefore, the best choice is B.

Jack's Toys Sells Kites for $40 Each