If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, what is the contribution margin ratio?
A) 38%
B) 26.8%
C) 11.8%
D) 62%

Name: If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, what is the contribution margin ratio? A) 38% B) 26.8% C) 11.8% D) 62%
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Question

Quizplus · Accepted Answer

The contribution margin ratio is calculated as (Sales - Variable Costs) / Sales. Given that variable costs are 62% of sales, the contribution margin ratio is 100% - 62% = 38%.

If Sales Are $425,000, Variable Costs Are 62% of Sales