To calculate the Contribution Margin Ratio, we first need to determine the contribution margin per unit and then express it as a percentage of the sales price per unit.

Given Data:

• Sales price per unit = $500
• Variable manufacturing expense per unit = $50
• Variable marketing expense per unit = $50
• Fixed expenses = $100,000 (not directly relevant for calculating contribution margin ratio)
• Units sold = 5,000 (not directly relevant for calculating contribution margin ratio)

Steps:

1. Calculate Total Variable Cost per Unit: $\text{Total Variable Cost per Unit} = \text{Variable Manufacturing Expense} + \text{Variable Marketing Expense}$ $= 50 + 50 = 100$

2. Calculate Contribution Margin per Unit: $\text{Contribution Margin per Unit} = \text{Sales Price per Unit} - \text{Total Variable Cost per Unit}$ $= 500 - 100 = 400$

3. Calculate Contribution Margin Ratio: $\text{Contribution Margin Ratio} = \frac{\text{Contribution Margin per Unit}}{\text{Sales Price per Unit}} \times 100\%$ $= \frac{400}{500} \times 100\% = 80\%$

Answer:

The Contribution Margin Ratio is 80%.

Would you like further details or have any questions?

Related Questions:

1. How would changes in variable costs affect the contribution margin ratio?
2. What impact does an increase in fixed expenses have on the break-even point?
3. How can the contribution margin ratio be used to make pricing decisions?
4. What is the significance of a high contribution margin ratio for a company?
5. How does the contribution margin ratio relate to profitability?

Tip:

A higher contribution margin ratio indicates that a larger portion of sales revenue contributes to covering fixed costs and generating profit.