Show your calculation for the following questions on the spaceprovided. You can use additional paper if the space availableis not enough. Five points will be awarded for each correctanswer.
1. The followingis Allison Corporation's formal income statement for lastmonth:
Sales $800,000
Less VariableExpenses 300,000
ContributionMargin $500,000
Less FixedExpenses 400,000
NetIncome $100,000
The Company has no beginnings or ending inventories. TheCompany produced and sold 10,000 units last month. What is the Company's contribution margin ratio?
(a) 62.5%
(b) 160.0%
(c) 500%
(d) 20%