Question

Wang Co. manufactures and sells a single product that sells for $550 per unit; variable costs are $297 per unit. Annual fixed costs are $966,000. Current sales volume is $4,300,000. Compute the contribution margin ratio.

Answer 1

Answer:

contribution margin ratio= 0.46

Explanation:

Giving the following information:

Wang Co. manufactures and sells a single product that sells for $550 per unit; variable costs are $297 per unit.

To calculate the contribution margin ratio, we need to use the following formula:

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

contribution margin ratio= (550 - 297) / 550

contribution margin ratio= 0.46