If the unit contribution margin is $40 and the selling price is $200, the contribution margin percentage is ____________?
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Answer: A. 20%
Explanation
Dividing the unit contribution margin of forty dollars by the selling price of two hundred dollars produces twenty percent. This proportion shows the portion of each sales dollar available to cover fixed costs. The contribution margin percentage expresses profitability relative to revenue on a per-unit or aggregate basis. It highlights the efficiency of product pricing structures against direct variable cost outlays.
Retail businesses use this percentage to evaluate product lines and determine commission structures for sales teams. Maintaining a high margin ensures adequate funds remain after variable costs are paid. Options B, C, and D stem from calculation errors or misapplied formulas dividing the figures incorrectly. Option A accurately represents the exact quotient converted into a standard percentage format.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
Related questions
Q1. If the contribution margin is $12000 and total variable cost is $7000, the total revenue is _____________?
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Answer: A. $5,000
Adding contribution margin and total variable cost yields the total revenue. This calculation reverses the standard contribution margin subtraction formula. The resulting sum accurately reflects the total revenue generat...
Q2. If the budgeted indirect cost rate is $115 and the budgeted cost allocation base is $830 per hour, the budgeted annual indirect cost is ___________?
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Answer: D. $95,450
Multiplying the indirect cost rate by the allocation base yields total cost. The calculation correctly applies the standard overhead allocation formula. The resulting product accurately reflects the budgeted annual indir...
Q3. If the contribution margin is $72000 and the operating income is $12000, the degree of operating leverage is ___________?
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Answer: C. 6
Dividing the contribution margin of seventy-two thousand dollars by the operating income of twelve thousand dollars yields six. This mathematical ratio demonstrates how sensitive operating income is to percentage changes...
Q4. If budgeted fixed manufacturing cost is $150000 and the cost per unit is $120, the budgeted production units are ________?
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Answer: A. $1,250
Dividing budgeted fixed manufacturing cost by cost per unit yields production units. This calculation determines the volume required to achieve the per-unit cost. The resulting figure matches the exact budgeted productio...
Q5. If the budgeted output quantity is 450 units and budgeted fixed overhead cost is $250, the budgeted fixed overhead per output unit is __________?
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Answer: B. $112,500
Budgeted fixed overhead per output unit is derived from fixed overhead budgets and output quantities.
Q6. If the contribution margin per unit is $1000 and the contribution margin percentage is 25%, the selling price is ____________?
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Answer: B. $4,000
Dividing unit contribution margin by the contribution margin percentage gives price. The mathematical operation correctly reverses the percentage relationship formula. The resulting four thousand dollars represents the e...