Question

Ripa Company has the following data: Sales revenue $360,000 Variable costs $240,000 Contribution margin $120,000 Fixed...

Ripa Company has the following data:

Sales revenue $360,000
Variable costs $240,000
Contribution margin $120,000
Fixed costs $100,000
Operating income $ 20,000

What will the contribution margin ratio be at Ripa Company if sales volume increases by 15%?

Homework Answers

Answer #1

Contribution margin ratio = $ 138,000/ $ 414,000 = 33.33%

Working:

Calculation
Sales revenue $                 414,000 360000+(360000*15%)
Less: variable cost $                 276,000 240000+(240000*15%)
Contribution margin $                 138,000
Less: Fixed cost $                 100,000
Operating income $                   38,000
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