Magic Maid Service provides maid service to residential clients. Following are data for a recent week:
$$\begin{array} { l l }
\text { Service Revenue } & \$ 3,200 \
\text { Veriable Costs } & 1,900
\end{array}$$ The contribution margin ratio is 59.38% (rounded to two decimal places).

Question

Magic Maid Service provides maid service to residential clients. Following are data for a recent week:
 $$\begin{array} { l l } 
\text { Service Revenue } & \$ 3,200 \
\text { Veriable Costs } & 1,900
\end{array}$$ The contribution margin ratio is 59.38% (rounded to two decimal places).

Quizplus · Accepted Answer

The contribution margin ratio is calculated as (Service Revenue - Variable Costs) / Service Revenue. Here, it would be ($3,200 - $1,900) / $3,200 = 40.63%, not 59.38%.

Magic Maid Service Provides Maid Service to Residential Clients Service Revenue $3,200 Veriable Costs 1,900\begin{array} { l l } \text { Service Revenue } & \$ 3,200 \\\text { Veriable Costs } & 1,900\end{array} Service Revenue Veriable Costs ​$3,2001,900​

Magic Maid Service Provides Maid Service to Residential Clients $\begin{array} { l l } \text { Service Revenue } & \$ 3,200 \\\text { Veriable Costs } & 1,900\end{array}$