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DanielleCPA
DanielleCPA, Certified Public Accountant (CPA)
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a. Bert Company budgets sales of $1,250,000 fixed costs of

Customer Question

a. Bert Company budgets sales of $1,250,000 fixed costs of $450,000, and variable costs of $200,000. What is the contribution margin ratio for Bert Company?

b. If the contribution margin ratio for Ernie Company is 40%, sales were $750,000, and fixed costs were $225,000, what was the income from operations?
Submitted: 5 years ago.
Category: Finance
Expert:  DanielleCPA replied 5 years ago.

DMC :

Hi and welcome to Just Answer! I'm happy to help answer your Finance questions. Feel free to interject at any time if you need clarification.

A) Contribution Margin = Sales - Variable Costs (1,250,000-200,000)= 1,050,000

Contribution Margin/Sales = .84

B. 750,000 * .4 = 300,000 contribution margin,
300,000 - 225,000 fixed costs = 75,000 income from operations

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