The world's foremost cement manufacturer, GPB Inc., has supplied the following data: Tons of cement produced and sold 680,000 Sales revenue $ 2,878,000 Variable manufacturing expense $ 1,156,000 Fixed manufacturing expense $ 760,000 Variable selling and administrative expense $ 227,000 Fixed selling and administrative expense $ 294,000 Net operating income $ 306,000
Calculate the company's contribution margin ratio

51.95%

Explanation:

Contribution margin ratio shows the contribution margin as percentage of sales.

Contribution margin is the total sales minus variable cost.

variable costs=variable manufacturing expense+variable selling and administrative expense

variable costs=$1,156,000+$227,000=$ 1,383,000.00  

contribution margin =$2,878,000-$ 1,383,000=$1,495,000

contribution margin ratio=contribution margin /sales

                                        =$ 1,495,000.00/$2,878,000 =51.95%

The company contribution's margin ratio is 51.95%

This implies that contribution is more than half of sales revenue.

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