Which of the following the correct formula for calculating contribution margin ratio?
A) Contribution margin ratio = Contribution margin + Net sales revenue
B) Contribution margin ratio = Contribution margin / Net sales revenue
C) Contribution margin ratio = Contribution margin × Net sales revenue
D) Contribution margin ratio = Contribution margin - Net sales revenue

Question

Quizplus · Accepted Answer

Contribution margin ratio is calculated by dividing contribution margin by net sales revenue. Therefore, the correct formula is Contribution margin ratio = Contribution margin / Net sales revenue. Option A is incorrect because it adds contribution margin and net sales revenue instead of dividing. Option C is incorrect because it multiplies contribution margin and net sales revenue. Option D is incorrect because it subtracts net sales revenue from contribution margin instead of dividing.

Which of the Following the Correct Formula for Calculating Contribution