Question

The Cutting Edge sells ice skates. Total sales are $845,000, total variable expenses are $245,050 and total fixed expenses are $302,000. The variable expense ratio is Blank______.

Multiple choice question.

100%


71%


35%


29%

Answer 1

To calculate the variable expense ratio, you can use the following formula:

\[
\text{Variable Expense Ratio} = \frac{\text{Total Variable Expenses}}{\text{Total Sales}}
\]

Using the numbers provided:

- Total Variable Expenses = $245,050
- Total Sales = $845,000

Now, plug in the values:

\[
\text{Variable Expense Ratio} = \frac{245,050}{845,000} \approx 0.2901
\]

To express this as a percentage:

\[
\text{Variable Expense Ratio} \approx 0.2901 \times 100 \approx 29.01\%
\]

Therefore, the variable expense ratio is approximately **29%**.

The correct answer from the options is:

**29%**.