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Homework answers / question archive / Garfield Corporation is considering building a new plant in Canada
Garfield Corporation is considering building a new plant in Canada. It predicts sales at the new plant to be 50,000 units at $5.00/unit. Below is a listing of estimated expenses.
|
Category |
Total Annual Expenses |
% of Annual Expense that are Fixed |
|
Materials |
$50,000 |
10% |
|
Labor |
$90,000 |
20% |
|
Overhead |
$40,000 |
30% |
|
Marketing/Admin |
$20,000 |
50% |
A Canadian firm was contracted to sell the product and will receive a commission of 10% of the sales price. No U.S. home office expenses will be allocated to the new facility.
The contribution margin ratio for Garfield Corporation is
A) 28.00%.
B) 38.00%.
C) 172.00%.
D) 72.00%.
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