The contribution margin ratio can be used to
A)determine the increase in profits from a given dollar increase in sales revenue.
B)determine the impact of fixed costs on contribution margin.
C)estimate the behavior of fixed cost.
D)determine an increase in fixed costs due to an increase in sales volume.

Question

Quizplus · Accepted Answer

The contribution margin ratio represents the portion of each unit sale that contributes toward covering fixed costs and providing profit. Therefore, it can be used to determine the increase in profits from a given dollar increase in sales revenue.

The Contribution Margin Ratio Can Be Used to