If the contribution margin per unit is $15 and selling price per unit is $20, the contribution margin ratio is:Group of answer choices133%.75%.60%.80%.
Question
If the contribution margin per unit is 20, the contribution margin ratio is:
- Group of answer choices
- 133%
- 75%
- 60%
- 80%.
Solution
The contribution margin ratio is calculated by dividing the contribution margin per unit by the selling price per unit.
Here's how you can calculate it:
Step 1: Identify the contribution margin per unit and the selling price per unit. In this case, the contribution margin per unit is 20.
Step 2: Divide the contribution margin per unit by the selling price per unit.
So, 20 = 0.75
Step 3: To express this as a percentage, multiply by 100.
So, 0.75 * 100 = 75%
Therefore, the contribution margin ratio is 75%.
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