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Electric Jet Skis operates a jet ski rental business

Accounting

Electric Jet Skis operates a jet ski rental business. Assume the jet skis rent for $55 per 6 hours. The variable costs are $33 per 6 hours rental, and its fixed costs are $80,000 each month. What is the contribution margin ratio?

A) 40%

B) 60%

C) 250%

D) 22%

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Answer:  A

Explanation:  A)

Sales                                              $55

Less Variable costs                      33

= Contribution Margin               22 divided by $55 sales = 40%

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