Psari's, a company that sells fishing nets, provides the following information about its product: $$\begin{array} { | l | r | }
\hline \text { Targeted operating income } & \$ 54,000 \
\hline \text { Sales price per unit } & 10.00 \
\hline \text { Variable cost per unit } & 1.50 \
\hline \text { Total fixed costs } & 120,000 \
\hline
\end{array}$$ What is the contribution margin ratio? (Round any intermediate calculations and your final answer to two decimal places.)

Question

Psari's, a company that sells fishing nets, provides the following information about its product: $$\begin{array} { | l | r | } 
\hline \text { Targeted operating income } & \$ 54,000 \
\hline \text { Sales price per unit } & 10.00 \
\hline \text { Variable cost per unit } & 1.50 \
\hline \text { Total fixed costs } & 120,000 \
\hline
\end{array}$$ What is the contribution margin ratio? (Round any intermediate calculations and your final answer to two decimal places.)

Quizplus · Accepted Answer

The contribution margin ratio is calculated as (Sales price per unit - Variable cost per unit) / Sales price per unit. Therefore, (10.00 - 1.50) / 10.00 = 0.85 or 85.00%.

Psari's, a Company That Sells Fishing Nets, Provides the Following