Fixed Company produces a single product selling for $30 per unit. Variable costs are $12 per unit and total fixed costs are $4,000. What is the contribution margin ratio? (Points :1)

1.67
2.50
0.40
0.60

1.67

1.67 is BEP

CM Ratio is 0.60

£¨30-12£©/30

0.6

To find the contribution margin ratio, we first need to calculate the contribution margin per unit.

The contribution margin per unit is the selling price per unit minus the variable cost per unit. In this case, the selling price per unit is $30 and the variable cost per unit is $12.

Contribution margin per unit = $30 - $12 = $18.

Next, we calculate the contribution margin ratio by dividing the contribution margin per unit by the selling price per unit.

Contribution margin ratio = Contribution margin per unit / Selling price per unit.

Contribution margin ratio = $18 / $30 = 0.6.

Therefore, the contribution margin ratio is 0.60, which means that for every dollar in sales revenue, $0.60 is available to cover fixed costs and contribute towards profit.