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A company has sold 11300 units for a total sales revenue of 88140 variable cost and fixed cost are 4.29 and 2.73 per unit respectively what is the sales contribution ratio?
Wiki User
∙ 16y ago
Total Sales Revenue = 88140
Total Cost = 11300 * (4.29+2.73) = 79326
Total Variable Cost = 79326 * 4.29 / (4.29+2.73) = 48477
Contribution Margin Ratio = 48477 / 88140 = .55 or 55 %
Wiki User
∙ 16y ago
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Is contribution margin equals sale revenue minus all variable cost?
yes.
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Contribution margin is the amount remaining from sales revenue once all variable costs have been removed ie. Contribution Margin = Sales Revenue - Variable Costs Segment margin is the margin available after a segment has covered all of its costs. It's one of the best ways to determine the long-term profitability of a segment. ie. Segment Margin = Segment's Contribution Margin - Fixed Costs traced to the Segment
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Total contribution is .. When more than one unit is sold, the total contribution can be calculated. You work it out by: total revenue minus total variable = total contribution eg. 1,000 pair of trousers, variable costs are £7.50 per pair, sold at £9.00 per pair. = total contribution total revenue - total variable cost = (£9.00 x 1,000) - (£7.50 x 1,000) = 9,000 - 7,500 = £1,500 This £1,500 will contribute to the companies fixed costs & profit. Another way of working out the total contribution would be multiplying the unit contribution by the number of units sold. = total contribution unit contribution x number of units sold = (£9.00 - £7.50) x 1,000 = £1.50 x 1,000 = £1,500 Hope this helps :P
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To compute the contribution ratio, you should divide the largest revenue source by the total revenue.
