Peeler's Smoothie Company has provided the following information: $$\begin{array} { | l | r | }
\hline \text { Sales price per unit } & \$ 6.50 \
\hline \text { Variable cost per unit } & \$ 2.00 \
\hline \text { Fixed costs per month } & \$ 1500 \
\hline
\end{array}$$ Calculate the contribution margin ratio.(Round your answer to two decimal places.)

Question

Peeler's Smoothie Company has provided the following information: $$\begin{array} { | l | r | } 
\hline \text { Sales price per unit } & \$ 6.50 \
\hline \text { Variable cost per unit } & \$ 2.00 \
\hline \text { Fixed costs per month } & \$ 1500 \
\hline
\end{array}$$ Calculate the contribution margin ratio.(Round your answer to two decimal places.)

Quizplus · Accepted Answer

The contribution margin per unit is the sales price per unit minus the variable cost per unit, which is $6.50 - $2.00 = $4.50. The contribution margin ratio is the contribution margin per unit divided by the sales price per unit, which is $4.50 / $6.50 = 0.6923 or 69.23%.

Peeler's Smoothie Company Has Provided the Following Information Calculate the Contribution Margin Ratio