If a company's monthly sales volume required to break even is $180,000 and its monthly fixed costs are $54,000, the contribution margin ratio is:

Question

If a company's monthly sales volume required to break even is $180,000 and its monthly fixed costs are $54,000, the contribution margin ratio is:

Answer 1

Selling price* units - FC - VC*units  = 0

 

180,000 - 54,000 - 126,000 = 0

 

Contribution margin is  180,000 - 126,000 = 54,000

54,000 / 180,000 = .30 or 30 percent