# A manufacturer of tiling grout has supplied the following data: The company's contribution margin...

## Question:

A manufacturer of tiling grout has supplied the following data:

 Kilograms produced and sold 490,000 Sales revenue $1,820,000 Variable manufacturing expense$941,000 Fixed manufacturing expense $228,000 Variable selling and administrative expense$361,000 Fixed selling and administrative expense $194,000 Net operating income$96,000

The company's contribution margin ratio is closest to:

a) 48.3%

b) 80.2%

c) 28.5%

d) 76.8%

## Answer and Explanation:

The formula to solve for the CM ratio is as follows:

• CM Ratio = (Sales - Variable Costs) / Sales

Sales totaled $1,820,000. Variable costs amounted to$1,302,000. Plugging in these figures, we'll solve.

• CM Ratio = (Sales - Variable Costs) / Sales
• CM Ratio = ($1,820,000 -$1,302,000) / $1,820,000 • CM Ratio = ($518,000) / \$1,820,000
• CM Ratio = 28.46% rounded

The correct answer is c) 28.5%.

#### Learn more about this topic:

Contribution Margin: Definition & Formula

from Introduction to Business: Homework Help Resource

Chapter 22 / Lesson 20
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