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Practice question chapter 7 , Quiz nr 1, selling price is calculated as v.c 28 / 70%. Please can you explain how 70% has been calculated? Thank you
The CS ratio is 30%. Given that the contribution is the selling price less the variable costs, then for every $100 the contribution is $30 and the variable costs must be $70, or 70% of the selling price.
If the variable cost is $28 and this is 70% of the sales, it means that the selling price must be 28/70%.
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