Variable costs as a percentage of sales are equal to 100% minus the contribution margin ratio.

Question

Quizplus · Accepted Answer

The contribution margin ratio is calculated as (Sales - Variable Costs) / Sales, which represents the percentage of each sales dollar that contributes to covering fixed costs and generating profit. Therefore, variable costs as a percentage of sales are indeed equal to 100% minus the contribution margin ratio, as this calculation essentially reverses the contribution margin ratio to focus on the variable costs portion.

Variable Costs as a Percentage of Sales Are Equal to 100