The Sports Arena location of Burgerheaven reports monthly sales of $140,000, variable costs of $63,000, and traceable fixed costs of $54,000. The contribution margin ratio of this business unit is:

Question

Quizplus · Accepted Answer

The contribution margin is calculated as sales minus variable costs. Here, it is $140,000 - $63,000 = $77,000. The contribution margin ratio is the contribution margin divided by sales, which is $77,000 / $140,000 = 0.55 or 55%.

The Sports Arena Location of Burgerheaven Reports Monthly Sales of $140,000