Better Bonds
Better Bonds provided the following data: $\begin{array}{lr}
\text { Sales } & \$ 540,000 \
\text { Variable costs } & \$ 378,000 \
\text { Fixed costs } & \$ 120,000 \
\text { Expected production and sales in units } & 40,000
\end{array}$
-Refer to Plastic Gym. The company expects tree house demand to increase from 4,000 to 8,000 units per year. What is the new contribution margin ratio?
A) 38%
B) 40%
C) 50%
D) 60%

Question

Quizplus · Accepted Answer

The contribution margin ratio is calculated as (Sales - Variable costs) / Sales. In this case, the contribution margin ratio is ($540,000 - $378,000) / $540,000 = 0.3, or 30%.

Better Bonds Better Bonds Provided the Following Data -Refer to Plastic Gym

Better Bonds
Better Bonds Provided the Following Data -Refer to Plastic Gym