The contribution margin ratio is:
A)the difference between sales revenue and variable costs.
B)the difference between variable costs and fixed costs.
C)variable costs divided by fixed costs.
D)contribution margin per unit divided by sales price per unit.

Question

Quizplus · Accepted Answer

The contribution margin ratio is the ratio of contribution margin per unit to sales price per unit. It represents the portion of each sales dollar that is available to cover fixed costs and contribute to profit. Therefore, the correct answer is D, as it reflects this calculation. A, B, and C do not correctly define the contribution margin ratio.

The Contribution Margin Ratio Is