The contribution margin ratio:
A) Cannot be used in conjunction with other analytical tools.
B) Is the same as the unit contribution margin.
C) Is the percent of each sales dollar that remains after deducting the total unit variable cost.
D) Is the percent of each sales dollar that remains to cover the variable and fixed costs.
E) Is the percent of each sales dollar that remains after deducting the total unit fixed cost.

Question

Quizplus · Accepted Answer

The contribution margin ratio is defined as the percent of each sales dollar that remains after deducting the total unit variable cost. It is a useful analytical tool for determining the profitability of a product or service and can be used in conjunction with other tools like break-even analysis and cost-volume-profit analysis. The unit contribution margin is simply the amount of revenue that remains after deducting the unit variable costs and is not the same as the contribution margin ratio.

The Contribution Margin Ratio