If the monthly sales volume required to break even is $190,000 and monthly fixed costs are $55,900,the contribution margin ratio is closest to:

Question

Quizplus · Accepted Answer

Contribution Margin Ratio = (Revenue - Variable Costs) / Revenue

To find the contribution margin ratio, we need to determine the variable costs. We can use the formula:

Break-even point = Fixed costs / Contribution margin ratio

190,000 = 55,900 / Contribution margin ratio

Contribution margin ratio = 55,900 / 190,000

Contribution margin ratio = 0.2942

Contribution margin ratio = 29% (rounded to the nearest whole number)

Therefore, the closest answer is A) 29%.

If the Monthly Sales Volume Required to Break Even Is