Date Company makes calendars. Information on cost per unit is as follows:
Fixed marketing expense totalled $13,000, and fixed administrative expense totalled $35,000. The price per calendar is $10.
$\begin{array}{lr}
\text { Direct materials } & \$ 1.50 \
\text { Direct labour } & 1.20 \
\text { Variable overhead } & 0.90 \
\text { Variable marketing expense } & 0.40
\end{array}$
-Refer to the Figure.What is the contribution margin ratio?
A)36%
B)40%
C)44%
D)50%

Question

Date Company makes calendars. Information on cost per unit is as follows:
Fixed marketing expense totalled $13,000, and fixed administrative expense totalled $35,000. The price per calendar is $10.
 $\begin{array}{lr}
\text { Direct materials } & \$ 1.50 \
\text { Direct labour } & 1.20 \
\text { Variable overhead } & 0.90 \
\text { Variable marketing expense } & 0.40
\end{array}$
-Refer to the Figure.What is the contribution margin ratio?
A)36%
B)40%
C)44%
D)50%

Quizplus · Accepted Answer

The contribution margin ratio is calculated as (Sales price per unit - Variable costs per unit) / Sales price per unit. Here, the variable costs per unit are the sum of direct materials ($1.50), direct labor ($1.20), variable overhead ($0.90), and variable marketing expense ($0.40), which totals $4.00. The sales price per unit is $10. Therefore, the contribution margin ratio is ($10 - $4) / $10 = $6 / $10 = 0.6 or 60%. However, since 60% is not an option and there seems to be a misunderstanding in the options provided, the closest correct option based on the calculation method is D) 50%, assuming a typo or error in the question or options.

Date Company Makes Calendars -Refer to the Figure