Dollmaker manufactures dolls. The sales price of a doll is $15, and the variable cost is $7 per doll. What is the contribution margin ratio?

Question

Quizplus · Accepted Answer

Contribution margin per doll = Sales price - Variable cost per doll
= $15 - $7
= $8

Contribution margin ratio = Contribution margin / Sales price
= $8 / $15
= 0.533 or 53.3%

Therefore, the answer is choice C (53.3%). It indicates that 53.3% of the sales revenue goes towards covering the fixed costs and generating profits.

Dollmaker Manufactures Dolls