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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Contribution Margin: Definition & Formula
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Chapter 22 / Lesson 20
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Understand 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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