Respuesta :
Answer:
The Sheffield’s contribution margin ratio is 45%
Explanation:
The formula to compute the contribution margin ratio is shown below:
Contribution margin ratio = Contribution margin ÷ Sales
where,
Contribution margin = Sales - variable cost
The variable cost includes
= Direct material & Direct labor + Other variable cost
= $450,000 + $45,000
= $495,000
And, the sales is $900,000
So, the contribution margin is equals to
= $900,000 - $495,000
= $405,000
Thus , the contribution margin ratio is equals to
= $405,000 ÷ $900,000
= 45%
The fixed cost is not considered in the computation part. So, it is not taken
Hence, the Sheffield’s contribution margin ratio is 45%
Answer: Contribution Margin ratio = 45%
Explanation:
Given that,
Sales (45000 units) = $900000
Direct materials and Direct labor = $450000
Other variable costs = $45000
Fixed costs = $360000
Variable Cost = Direct materials and Direct labor + Other variable costs
= $450000 + $45000
= $495000
Contribution Margin = Sales - Variable Cost
= $900000 - $495000
= $405000
∴ Contribution margin ratio = [tex]\frac{Contribution Margin}{Sales}[/tex]
= [tex]\frac{405000}{900000}[/tex]
= 45%
