Required: 1. Calculate the contribution margin ratio. Note: Enter as a percent, rounded to the nearest whole number. fill in the blank 1 % 2. Calculate the variable cost ratio. Note: Enter as a percent, rounded to the nearest whole number. fill in the blank 2 % 3. Calculate the break-even sales revenue for Ashton. Note: Round your answer to the nearest dollar.

Required: 1. Calculate the contribution margin ratio. Note: Enter as a percent, rounded to the nearest whole number. fill in the blank 1 % 2. Calculate the variable cost ratio. Note: Enter as a percent, rounded to the nearest whole number. fill in the blank 2 % 3. Calculate the break-even sales revenue for Ashton. Note: Round your answer to the nearest dollar.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 15E

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Question

Contribution Margin Ratio, Variable Cost Ratio, Break-Even Sales Revenue

The controller of Ashton Company prepared the following projected income statement:

Sales	$88,000
Total variable cost	23,760
Contribution margin	$64,240
Total fixed cost	43,800
Operating income	$20,440

Required:

1. Calculate the contribution margin ratio. Note: Enter as a percent, rounded to the nearest whole number.

fill in the blank 1 %

2. Calculate the variable cost ratio. Note: Enter as a percent, rounded to the nearest whole number.

fill in the blank 2 %

3. Calculate the break-even sales revenue for Ashton. Note: Round your answer to the nearest dollar.

$fill in the blank 3

4. How could Ashton increase projected operating income without increasing the total sales revenue?

Decrease the contribution margin ratio

Definition Definition Basic financial report that forecasts estimated profits, revenue, and expenses for the company in the coming year or months. Budgeted income statements are helpful for companies in planning for the future, making better decisions, and allocating available resources more effectively and efficiently.

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