Share
Explore BrainMass

Contribution margin ratio

For a recent year, Wicker Company had the following sales and expenses:

Sales $14,700
Food and packaging $4,133
Payroll 3,700
Occupancy (rent, depreciation, etc.) 4,327
General, selling, and administrative expenses 2,100
$14,260
Income from operations $440

Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.

a. What is Wicker Company's contribution margin?
$
b. What is Wicker Company's contribution margin ratio?
%

c. How much would income from operations increase if same-store sales increased by $900 for the coming year, with no change in the contribution margin ratio or fixed costs?
$

Solution Preview

For a recent year, Wicker Company had the following sales and expenses:

Sales $14,700
Food and packaging $4,133
Payroll 3,700
Occupancy (rent, depreciation, etc.) 4,327
General, selling, and administrative expenses 2,100
$14,260
Income from ...

Solution Summary

The solution assists in calculating contribution margin ratio.

$2.19