Question

Gifts Galore had a sales revenue of $189,000. Total contribution margin was $100,170 and total fixed expenses were $27,500. The contribution margin ratio was Blank______.

Multiple choice question.

68%


53%


38%


47%

Answer 1

To find the contribution margin ratio, you can use the following formula:

\[
\text{Contribution Margin Ratio} = \frac{\text{Total Contribution Margin}}{\text{Sales Revenue}} \times 100
\]

Given:
- Total Contribution Margin = $100,170
- Sales Revenue = $189,000

Now, plug in the values:

\[
\text{Contribution Margin Ratio} = \frac{100,170}{189,000} \times 100
\]

Calculating the ratio:

\[
\text{Contribution Margin Ratio} = \frac{100,170}{189,000} \approx 0.5300 \times 100 \approx 53\%
\]

So the contribution margin ratio is **53%**. The correct answer is:

**53%**