Answer:
1. Contribution Margin Ratio = 73%
2. Variable Cost ratio =27%
3. Break-even Sales = $60,000
Explanation:
Sales $88,000
Total variable cost <u>$23,760</u>
Contribution margin $64,240
Total Fixed Cost <u>$43,800</u>
Operating Income <u>$20,440</u>
1. Contribution Margin Ratio = Contribution margin / Sales = $64,240 / 88,000 = 73%
2. Variable Cost ratio = Variable cost / sales = $23,760 / $ 88,000 = 27%
3. Break-even Sales = Fixed Cost / Contribution margin = $43,800 / 73% = $60,000