The contribution margin ratio can be used to
A)Determine the increase in profits from a given dollar increase in sales revenue.
B)Determine the impact of fixed costs on contribution margin.
C)Both to determine the increase in profits from a given dollar increase in sales revenue and to determine the impact of fixed costs on contribution margin.
D)Neither to determine the increase in profits from a given dollar increase in sales revenue nor to determine the impact of fixed costs on contribution margin.

Question

Quizplus · Accepted Answer

The contribution margin ratio helps determine how much of each dollar of sales contributes to covering fixed costs and generating profit, thus indicating the increase in profits from a sales revenue increase.

The Contribution Margin Ratio Can Be Used to