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Carrabelle Company has provided the following information: Sales price per unit $56 Variable cost per unit 12 Fixed costs per month $12,000 Calculate the contribution margin ratio. (Round your answer to two decimal places.)

Respuesta :

Answer:

The Contribution margin ratio (CRM) is 78.57%

Explanation:

CRM (Contribution margin ratio), it indicates the percentage (%) of each sales dollar available to cover the fixed assets as well as profits of the company.

The formula to compute the contribution margin ratio (CMR) is as:

CMR (contribution margin ratio)  = (Sales - Variable expense) / Sales

where

Sales amounts to $56

Variable cost or expense amounts to $12

Putting the values above:

CRM (contribution margin ratio)  =($56- $12) / $56

= $44 / $56

= 78.57%