The contribution margin ratio is:
A) 40%.
B) 50%.
C) 55%.
D) 25%.

Question

Quizplus · Accepted Answer

The contribution margin ratio is calculated by dividing the contribution margin by the total sales. Based on the information provided, the contribution margin can be calculated as follows:
Contribution margin = Total sales - Total variable expenses
= $210,000 - $95,000
= $115,000

Therefore, contribution margin ratio = (Contribution margin ÷ Total sales) x 100%
= ($115,000 ÷ $210,000) x 100%
= 54.8% or approximately 55%.

Hence, the closest option to this is option C) 55%.

The Contribution Margin Ratio Is