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 ratio is calculated as (Sales price per unit - Variable cost per unit) / Sales price per unit. So, (6.50 - 2.00) / 6.50 = 4.50 / 6.50 = 0.6923 or 69.23%.

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