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Clark Company produces flash drives for computers, which it sells for $20 each. Each flash drive costs $12 of variable costs to make. During April, 1,000 drives were sold. Fixed costs for March were $2 per unit for a total of $1,000 for the month. How much is the contribution margin ratio

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facundobuzzetti

Answer:

contribution margin ratio= 0.4

Explanation:

Giving the following information:

Selling price per unit= $20

Unitary variable cost= $12

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= (20 - 12) / 20

contribution margin ratio= 0.4

The contribution margin ratio is 0.4.The contribution margin ratio is the difference between company sales and variable costs, expressed as a percentage.

What is the contribution margin ratio?

The total margin generated by an entity represents the amount of revenue available to cover fixed costs and generate profits.

The contribution margin ratio of a donation is the difference between a company’s sales and variable costs, expressed as a percentage. This ratio shows the amount of money available to cover fixed costs.

Giving the following information:

Selling price per unit is $20

Unitary variable cost is $12

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

[tex]\rm\,Contribution \;Margin\; Ratio= \frac{(Selling\; Price - Unitary Variable Cost)}{selling \;price} \\contribution \;margin\; ratio= \dfrac{ (20 - 12)}{20}\\Contribution\, margin\, ratio\, = 0.4[/tex]

Hence, the contribution margin ratio is 0.4.

To learn more about contribution margin ratio, refer:

https://brainly.com/question/26975994

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