Requirements 1 Calculate the contribution margin ratio 2 Pre

Requirements 1. Calculate the contribution margin ratio. 2 Prepare two contribution margin income statements: one at the $250,000 level and one at the $360,000 sales level. (Hint: The proportion of each that goes toward variable costs is constant within the relevant range.) sales

Solution

Ans. Contribution margin Ratio = 207025/318500X100 = 65%

                                                   Contribution margin income statement

Sales                                                 250000                     360000

Variable cost(100-65)= 35%    87500    126000

Contribution margin                             162500                      234000