[cpa1982]

Which one is right formula for Contribution margin ratio?

Variable Cost/Selling price or (Sale price-Variable cost)/Sale Price. In Roger’s BEC book, contribution margin per unit shows, Variable cost/Selling unit. While i was doing problem, solution says CMR is (sales-variable)/Sales.

I googled it and most sites says Variale cost/Selling unit. Here’s the problem i working on.

The following information data pertains to a manufacturing company:

Total sales $80,000
Total variable costs $20,000
Total fixed costs $30,000

What is the break-even level in sales dollars?

$80,000

$30,000

$50,000

$40,000

Correct Answer showing is $40,000.

If I use Variable cost/Sales = . 25
IF I use (sales-varibale)/Sales = .75 so 30,000/.75 = 40,000

[Tom]

Contribution margin = Sales – Variable Costs

So,

Contribution margin ratio = (Sales – Variable Costs)/Sales

AUD - 91
BEC - 86
FAR - 87
REG - 79

I'm done!

FAR - 87!!!
AUD - TBD (8/15/16)
REG - TBD (10/01/16)
BEC - TBD

[Author]

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