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Incline Company generated $4,900,000 in revenue selling 4,025 units of its only product. Each unit has a contribution margin of $280. The company has fixed costs of $125/unit at the current production volume (assume unit production volume equals unit sales volume). What is the contribution margin ratio for Incline's product?

Answer :

Answer:

23%

Explanation:

The computation of the contribution margin ratio is shown below:-

Selling price per unit = $4,900,000 ÷ 4,025 units

= 1217.39

Contribution margin ratio = Contribution margin ÷ Selling price

= $280 ÷ 1217.39

= 23%

Therefore for computing the contribution margin ratio we simply divide selling price by contribution margin.

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