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Selling price per unit (package of 2 CDs)...................................... $24.00 Variable costs per unit: Direct material............................................................................................................... $5.50 Direct labor...................................................................................................................... $4.50 Artist's royalties.............................................................................................................. $4.00 Manufacturing overhead.......................................................................................... $3.00

Selling price per unit (package of 2 CDs)......................................

$24.00

Variable costs per unit:

Direct material...............................................................................................................

$5.50

Direct labor......................................................................................................................

$4.50

Artist's royalties..............................................................................................................

$4.00

Manufacturing overhead..........................................................................................

$3.00

Selling expenses............................................................................................................

$1.10

Total variable costs per unit............................................................

$18.10

Annual fixed costs:

Manufacturing overhead..........................................................................................

$186,000

Selling and administrative.......................................................................................

$260,000

Total fixed costs................................................................................

$446,000

Forecasted annual sales volume (120,000 units).........................

$2,880,000

What is the company's contribution margin ratio (CM ratio)?

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