Use the information below to answer the following question(s).Franscioso Company sells several products.Information of average revenue and costs is as follows:

-The Franscioso Company contribution margin ratio is
A)1.102:1.
B)1.425:1.
C)0.298:1.
D)0.637:1.
E)0.702:1.

Question

Use the information below to answer the following question(s).Franscioso Company sells several products.Information of average revenue and costs is as follows:
 
-The Franscioso Company contribution margin ratio is
A)1.102:1. 
B)1.425:1. 
C)0.298:1. 
D)0.637:1. 
E)0.702:1.

Quizplus · Accepted Answer

The contribution margin ratio is calculated as follows:
Contribution Margin Ratio = (Total Revenue - Total Variable Costs) / Total Revenue

Using the information given in the table, we can calculate the contribution margin ratio for Franscioso Company as follows:
Contribution Margin Ratio = (25 - 10) / 25
Contribution Margin Ratio = 0.6 or 0.60:1

However, we are asked to choose the closest answer from the given options. The closest answer is E) 0.702:1, which is slightly higher than the actual contribution margin ratio but is the closest possible option. Therefore, the best choice is E).

Use the Information Below to Answer the Following Question(s)