Asked by
Felicity Asare
on Nov 19, 2024
Verified
Boespflug Incorporated has a $1,000,000 investment opportunity that involves sales of $900,000, fixed expenses of $225,000, and a contribution margin ratio of 30% of sales. The margin for this investment opportunity is closest to:
A) 5.0%
B) 25.0%
C) 75.0%
D) 30.0%
Contribution Margin Ratio
The percentage of each sale that contributes to covering fixed costs, calculated as contribution margin divided by sales revenue.
Fixed Expenses
Expenditures that stay unchanged despite differences in the volume of production or sales, covering items like rental fees, payroll, and coverage costs.
Sales
The exchange of goods or services for money, quantifying the performance and profitability of a business.
- Understand the concept of margin in the context of investment opportunities and company operations.
- Understand the implications of fixed expenses, sales, and contribution margin ratios on financial decision-making.
Verified Answer
DS
Learning Objectives
- Understand the concept of margin in the context of investment opportunities and company operations.
- Understand the implications of fixed expenses, sales, and contribution margin ratios on financial decision-making.