Peeler's smoothie company has provided the following information: sales price per unit $6.50 variable cost per unit $2.00 fixed costs per month $1,500 calculate the contribution margin ratio. (round your answer to two decimal places.)

contribution margin ratio. = 0.62

Explanation:

The first concep to define would be contribution margin:

Contribution margin is the amount left after deducing the variable cost.

Now the Contribution Margin ratio would be:

This represent how much is left per dollar of sale

So a ratio of 0.25 means that per every dollar of sales, the business generates 0.25 cent of contribution

Now that we got this clear, we proceed with the calculation:

The fixed cost are irrelevant for this calculations.

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