Dairy Days Ice Cream sells ice cream cones for $4 per customer

Accounting Feb 25, 2021

Dairy Days Ice Cream sells ice cream cones for $4 per customer. Variable costs are $3 per cone. Fixed costs are $2,500 per month. What is Dairy Days' contribution margin ratio?

A) 267%

B) 25%

C) 2%

D) 63%

Expert Solution

Answer: B

Explanation: B)

Sales $4

Less Variable costs 3

= Contribution Margin 1 divided by $4 sales = 25%

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