The contribution margin ratio is:

Question

Quizplus · Accepted Answer

To calculate the contribution margin ratio, we need to divide the contribution margin by the total revenue. 
Contribution margin = Total revenue - Total variable costs 
Contribution margin = $40,000 - ($20,000 + $12,000) 
Contribution margin = $40,000 - $32,000 = $8,000 
Contribution margin ratio = (Contribution margin / Total revenue) x 100% 
Contribution margin ratio = ($8,000 / $21,333) x 100% 
Contribution margin ratio = 37.5% 
Therefore, the best choice is (D) 37.5%.

The Contribution Margin Ratio Is