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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4434
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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Calculate (a) the contribution margin and (b) the contribution

Customer Question

Calculate (a) the contribution margin and (b) the contribution margin ratio based on the following data: (Be sure to label your answers appropriately)
Sales 1,000,000

Variable costs 600,000

Fixed costs 200,000
Submitted: 5 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 5 years ago.

Dear Friend,

 

Contribution Margin ::::

 

Contribution Margin = Revenue - Variable Cost, i.e. 1,000,000 - 600,000 = 400,000.

 

Contribution Margin Ratio :::

 

Contribution Margin Ratio = (sales - variable costs)/sales., i.e. (1,000,000 - 600,000)/1,000,000 = 0.40

 

I hope this helps...

Warm Regards,

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