   Chapter 21, Problem 21.9EX

Chapter
Section
Textbook Problem

Contribution margin ratio a. Yountz Company budgets sales of $2,400,000, fixed costs of$525,000, and variable costs of $1,560,000. What is the contribution margin ratio for Yountz Company? b. b. If the contribution margin ratio for Vera Company is 40%, sales were$3,400,000 and fixed costs were $800,000, what was the income from operations? a. To determine Contribution Margin ratio: It is a ratio that measures the contribution margin generated by the company from the sales to make it avialable for paying the fixed cost and generate a profit. It is expressed as percentage of margin available from each dollar sales to pay fixed expenses and to provide profit. It is also called as profit-volume ratio. The formula to calculate the contribution margin ratio is as follows: ContributionMarginRatio =ContributionMarginSales×100 To determine: contribution margin ratio for Y Company. Explanation Determine the contribution margin ratio for Y Company. Sales =$2,400,000

Variable cost =1,560,000

ContributionMarginRatio =ContributionMarginSales×100=SalesVariablecostSales×100</

b.

To determine
the income from operations.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

If a firms ROE is low and management wants to improve it, explain how using more debt might help.

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

Why is it necessary to journalize and post adjusting entries?

College Accounting (Book Only): A Career Approach

FINANCIAL MARKETS AND INSTITUTIONS Assume that you recently graduated with a degree in finance and have just re...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List) 