Question

4. Contribution Margin Ratio a. Yountz Company budgets sales of \$950,000, fixed costs of \$21,400, and...

4. Contribution Margin Ratio

a. Yountz Company budgets sales of \$950,000, fixed costs of \$21,400, and variable costs of \$95,000. What is the contribution margin ratio for Yountz Company? (Enter your answer as a whole number.)
%____

b. If the contribution margin ratio for Vera Company is 48%, sales were \$833,000, and fixed costs were \$291,880, what was the income from operations?
\$___

1) Contribution Margin Ratio = 90%

Contribution Margin Ratio = Margin Ratio / Net Sales x 100

Net Sales = 950000

Contribution Margin = Net Sales Revenue - Variable Cost = 950000 - 95000 = 855000

So Contribution Margin Ratio = 855000 / 950000 x 100

= 0.9 x 100 = 90%

2)

Net Income Will be 107960

Net Sales = 833000

Fixed Cost = 291880

Contribution Margin Ratio = 48%

So Contribution Margin = Net Sales x Contribution Margin Ratio

= 833000 x 0.48 = 399840

Then Variable Cost will be = Net Sales - Contribution Margin = 833000 - 399840 = 433160

Then Net Income as follows:

 Income Statement Sales Revenue 833,000 Less : Variable Cost (433,160) Contribution Margin 399,840 Less : Fixed Cost (291,880) Net Income 107,960