LaComedia Dinner Theater sells tickets for dinner and a show for $40 each

Accounting Feb 26, 2021

LaComedia Dinner Theater sells tickets for dinner and a show for $40 each. The cost of providing dinner is $26 per ticket and the fixed cost of operating the theater is $100,000 per month. The company can accommodate 12,000 patrons each month. What is the contribution margin ratio?

A) 65%

B) 35%

C) 14%

D) 286%

Expert Solution

Answer: B

Explanation: B)

Sales $40

Less Variable costs 26

= Contribution Margin 14 Divided by $40 = 35%

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