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Calculate the contribution margin ratio

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Reference no: EM132700169

Problem - Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Fixed factory overhead is $20,000, and fixed selling and administrative expense is $29,500.

Required -

Calculate the variable cost ratio.

Calculate the contribution margin ratio.

Prepare a contribution margin income statement based on the budgeted figures for next year. In a column next to the income statement, show the percentages based on sales for sales, total variable cost, and total contribution margin.

Reference no: EM132700169

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