# Lee Industry sales are $525,000, variable costs are 53% of sales, and operating income is...

## Question:

Lee Industry sales are $525,000, variable costs are 53% of sales, and operating income is $19,000. What is the contribution margin ratio?

## Calculating the Contribution Margin:

The contribution margin can be defined as the amount of sales revenue left over after paying for variable costs that is available to cover fixed costs and expenses and generate a profit. It is a crucial figure in break-even analysis.

## Answer and Explanation: 1

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Note that Contribution Margin = Sales - Variable Costs

Sales | $525,000 |

Variable cost | 278,250 ($525,000 x 0.53) |

Contribution margin | $246,750 |

Contr... |

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Chapter 22 / Lesson 20Understand what the contribution margin is. Learn the definition of contribution margin and understand its importance in business. Discover how to calculate it through examples.

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