A manufacturer of cedar shingles has supplied the following dа ta: Bundles of cedar shakes produced and sold 257,000 Sales revenue $ 2,081,700 Variable manufacturing expense $ 974,700 Fixed manufacturing expense $ 503,000 Variable selling and administrative expense $ 259,700 Fixed selling and administrative expense $ 289,000 Net operating income $ 55,300 The company's contribution margin ratio is closest to: (Do not round intermediate calculations. Round your answer to whole percentage.) 59% 68% 32% 41%

Question

Business

Braxton Wyatt

12 November, 18:53

A manufacturer of cedar shingles has supplied the following dа ta: Bundles of cedar shakes produced and sold 257,000 Sales revenue $ 2,081,700 Variable manufacturing expense $ 974,700 Fixed manufacturing expense $ 503,000 Variable selling and administrative expense $ 259,700 Fixed selling and administrative expense $ 289,000 Net operating income $ 55,300 The company's contribution margin ratio is closest to: (Do not round intermediate calculations. Round your answer to whole percentage.) 59% 68% 32% 41%

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Answers (1)

Know the Answer?

Rocco Grimes · Answer 1

The correct answer is D: 41%

Explanation:

Giving the following information:

Bundles of cedar shakes produced and sold 257,000

Sales revenue $ 2,081,700

Variable manufacturing expense $ 974,700

Fixed manufacturing expense $ 503,000

Variable selling and administrative expense $ 259,700

Fixed selling and administrative expense $ 289,000

Contribution margin ratio = (selling price - unitary variable cost) / selling

price

Selling price = sales / units sold = 2081700/257000 = $8.1

Total variable cost = Variable manufacturing expense + Variable selling and administrative expense = 974,700 + 259,700 = $1,234,400

Unitary variable cost = 1,234,400/257000 = 4.80

Contribution margin ratio = (8.1 - 4.80) / 8.1 = 0.407 = 40.7%=41%