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Steffen Corporation has three products... Steffen Corporation has three products with the following characteristics: Product A Product BProduct C Monthly sales in dollars $120,000 $160,000 $200,000 Contribution margin ratio 20% 40% 16% The overall contribution margin ratio for the company as a whole is closest to:

A.35.3%
B.25.0%
C.75.0%
D.28.5%

Respuesta :

Answer:

B.25.0%

Explanation:

For computing the overall contribution margin ratio, we have to first compute the weightage

                                                                (A)                 (B)                (A × B)

Product        Monthly sales in dollars  Weightage   CM ratio    Overall CM ratio

Product A     $120,000                          25%              20%           5%

Product B     $160,000                          33.33%         40%          13.33%

Product C     $200,000                         41.67%          16%           6.67%

Total             $480,000                          100%                              25%

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