Question

a. Segar Company budgets sales of $3,200,000, fixed costs of $700,000, and variable costs of $2,240,000. What is the contribution margin ratio for Segar Company? (Enter your answer as a whole number.)%b. If the contribution margin ratio for Domino Company is 35%, sales were $2,100,000, and fixed costs were $400,000, what was the income from operations?$

Answer 1

Answer:

a. 30%

b. $335,000

Explanation:

a. The computation of the contribution margin ratio is shown below:

Contribution margin ratio = (Contribution margin) ÷ (Sales) × 100

where,

Contribution margin  = Sales - Variable cost

= $3,200,000 -  $2,240,000

= $960,000

And, the sales is $3,200,000

Now put these values to the above formula  

So, the value would equal to

So, the Contribution margin ratio = ( $960,000) ÷ ($3,200,000 ) × 100 = 30%

b. The computation of the income from operations is shown below:

= Contribution margin - fixed cost

= $2,100,000 × 35% - $400,000

= $735,000 - $400,000

= $335,000