The contribution margin ratio is computed as:
A)Sales minus variable costs,divided by sales.
B)Fixed costs plus variable costs,divided by sales.
C)Sales minus fixed costs,divided by sales.
D)Sales divided by variable costs.

Question

Quizplus · Accepted Answer

The contribution margin ratio is computed by dividing the contribution margin (sales minus variable costs) by sales. This ratio represents the portion of sales revenue that is available to cover fixed costs and contribute to profits. Option A is the correct choice because it includes the correct formula for calculating the contribution margin ratio.

The Contribution Margin Ratio Is Computed As