The contribution margin ratio always increases when which of the following occurs?

Question

Quizplus · Accepted Answer

The contribution margin ratio is calculated as the contribution margin divided by sales revenue. It represents the percentage of each dollar of revenue that is available to cover fixed expenses and contribute to net income. As variable expenses decrease as a percentage of sales, the contribution margin increases, resulting in a higher contribution margin ratio. This is because a higher proportion of each sales dollar is contributed to covering fixed expenses and generating profit.

The Contribution Margin Ratio Always Increases When Which of the Following