moodlebergenedu 1 Managerial Acct ACC210 B Clark Company pro

moodle.bergen.edu 1 Managerial Acct (ACC-210- B) Clark Company produces flash drives for computers, which it sells for $25 each. Each flash drive costs $19 of variable costs to make. During April, 880 drives were sold. Fixed costs for March were $3 per unit for a total of $1,800 for the month. How much is the contribution margin ratio? Round to the nearest percent. red t 2 tion Select one: a, 18% b. 24% ?. 76% d. 82% O O s page Next page NAVIGATION 2 3 4 5 67 |8 9 10 11 12 13 14 15 17 18 19 20 21 22 23 24 25 26 27 (28 29 30 10

Solution

The Correct Answer would be Option B - 24%

Step 1 - Calculation of Contribution Margin

Contribution Margin = Sales - Variable cost

Sales = 880 drives @ $25 per drive

Sales = 880 * $25

Sales = $22,000

Variable cost = 880 drives @ $19 per drive

Variable cost = 880 * $19

Variable cost = $16,720

Therefore

Contribution Margin = Sales - Variable cost

Contribution Margin = $22,000 - $16,720

Contribution Margin = $5280

Step 2 - Calculation of Contribution Margin Ratio

Contribution Margin Ratio = (Contribution Margin / Sales) *100

Contribution Margin Ratio = ($5280 / $22,000) * 100

Contribution Margin Ratio = 24%