question archive Young Company has provided the following information: Price per unit $40 Variable cost per unit 12 Fixed costs per month $10,000 What is the contribution margin ratio? A) 12% B) 60% C) 40% D) 70%
Young Company has provided the following information: Price per unit $40 Variable cost per unit 12 Fixed costs per month $10,000 What is the contribution margin ratio? A) 12% B) 60% C) 40% D) 70%
Subject:AccountingPrice:2.87 Bought7
Young Company has provided the following information:
|
Price per unit |
$40 |
|
Variable cost per unit |
12 |
|
Fixed costs per month |
$10,000 |
What is the contribution margin ratio?
A) 12%
B) 60%
C) 40%
D) 70%
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Answer
Unit Contribution = Unit Sale price – Unit Variable Cost
= $ 40 - $ 12 = $ 28
Contribution margin Ratio (CM Ratio) = Unit Contribution / Unit Sales Price
= $ 28 / $ 40 = 0.7
Hence, CM Ratio = 70% [0.7 x 100) = Option D: 70%
