The per dollar contribution toward fixed operating costs and profits provided by each dollar ofsales is the
A) expense ratio.
B) contribution margin.
C) fixed coverage ratio.
D) profit margin.

Question

Quizplus · Accepted Answer

The contribution margin is the amount remaining from sales revenue after variable costs have been deducted. It represents the per dollar contribution toward fixed operating costs and profits provided by each dollar of sales. Thus, it is the best choice for this question. The expense ratio represents the percentage of sales that goes toward expenses, the fixed coverage ratio measures the ability of a company to cover its fixed costs with operating income, and the profit margin represents the percentage of sales that result in profit.

The Per Dollar Contribution Toward Fixed Operating Costs and Profits