Johar Company provides the following information about its product: $$\begin{array} { | l | r | }
\hline \text { Targeted operating income } & \$ 65,000 \
\hline \text { Selling price per unit } & 12.00 \
\hline \text { Variable cost per unit } & 1.80 \
\hline \text { Total fixed costs } & 130,000 \
\hline
\end{array}$$
What is the contribution margin ratio?
A) 85%
B) 100%
C) 118%
D) 15%

Question

Johar Company provides the following information about its product: $$\begin{array} { | l | r | } 
\hline \text { Targeted operating income } & \$ 65,000 \
\hline \text { Selling price per unit } & 12.00 \
\hline \text { Variable cost per unit } & 1.80 \
\hline \text { Total fixed costs } & 130,000 \
\hline
\end{array}$$ 
What is the contribution margin ratio?
A) 85%
B) 100%
C) 118%
D) 15%

Quizplus · Accepted Answer

The contribution margin ratio is calculated as (Selling Price per Unit - Variable Cost per Unit) / Selling Price per Unit. Therefore, (12.00 - 1.80) / 12.00 = 0.85 or 85%.

Johar Company Provides the Following Information About Its Product What Is the Contribution Margin Ratio? A) 85% B) 100

Johar Company Provides the Following Information About Its Product What Is the Contribution Margin Ratio?
A) 85%
B) 100