Izzy Creations provides the following information about its single product:

What is the contribution margin ratio?

Question

Izzy Creations provides the following information about its single product:

What is the contribution margin ratio?

Quizplus · Accepted Answer

The contribution margin ratio can be calculated as (selling price - variable cost) / selling price. Without knowing the actual values of the selling price and variable cost, we cannot calculate the exact contribution margin ratio. However, we can see that the answer choices range from 0.08 to 0.60, which means that the variable cost must be a significant portion of the selling price. Therefore, based on the answer choices, C (0.40) is the best choice for the contribution margin ratio.

Izzy Creations Provides the Following Information About Its Single Product