. If sales total $1,000,000, fixed costs total $400,000,
and variable costs are 55% of sales, the...

Question

. If sales total $1,000,000, fixed costs total $400,000,
and variable costs are 55% of sales, the contribution margin ratio is 60%.

A.
 
 True
 
 B.
 
 False

David · Accepted Answer

SOLUTION: 
Contribution Margin Ratio = 100% - Variable Cost percentage 
Contribution Margin Ratio = 100% - 55% 
Contribution Margin Ratio = 45% 
So, the statement is False.

. If sales total $1,000,000, fixed costs total $400,000, and variable costs are 55% of sales, the contribution margin ratio is 60%. A. True B. False

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