The contribution-margin ratio is:
A) the difference between the selling price and the variable cost per unit.
B) fixed cost per unit divided by variable cost per unit.
C) variable cost per unit divided by the selling price.
D) unit contribution margin divided by the selling price.
E) unit contribution margin divided by fixed cost per unit.

Question

Quizplus · Accepted Answer

The contribution-margin ratio is calculated as the unit contribution margin (selling price minus variable cost per unit) divided by the selling price. This ratio indicates the percentage of each sales dollar available to cover fixed costs and to provide profits.

The Contribution-Margin Ratio Is