Ludington Corporation provides the following data from a recent period for its manufacture of shoes: direct material costs, $24,000; direct labor costs, $12,000; and total fixed costs, $40,000. Sales were $60,000 based on 12,000 units sold during the period. Calculate the contribution margin and the contribution margin ratio.

What will be an ideal response?



Contribution Margin??
Sales…………………………………$60,000 Contribution Margin/Sales =CM%
Less Variable Costs:? $24,000/$60,000 = 40%
  Direct materials……………………$24,000?
  Direct labor………………………12,000?
  Total variable costs………………$36,000?
Contribution Margin…………………$24,000?

Business

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