Rachel’s Candelabra Shoppe sells candles to clients for $6.00 each. The variable cost to produce each candle is $2.25 per candle. The fixed costs are $2,800 per month. What is the firm’s contribution margin ratio?

The firm's contribution margin ratio is 62.5%

Explanation:

Contribution margin is the net of selling price and variable cost. It is the net return available to cover the fixed cost and make profit. Contribution margin ratio is the ratio of contribution margin to sale price.

According to given data

Price = $6

Variable cost = $2.25

Contribution margin = Price - variable cost = $6 - $2.25 = $3.75

Contribution margin ratio = 3.75 / 6 = 0.625 = 62.5%

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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