Which of the following is the mathematical expression of contribution margin ratio?
A) Contribution margin ratio = Contribution margin percentage × Revenues (in dollars)
B) Contribution margin ratio = Contribution margin percentage × Fixed costs (in dollars)
C) Contribution margin ratio = Contribution margin percentage × Variable costs (in dollars)
D) Contribution margin ratio = Contribution margin percentage × Operating leverage

Question

Quizplus · Accepted Answer

The contribution margin ratio is calculated by dividing the contribution margin (sales minus variable costs) by sales revenue and is often expressed as a percentage. This ratio indicates the percentage of each sales dollar available to cover fixed costs and generate profit. None of the other options accurately represent the calculation of the contribution margin ratio.

Which of the Following Is the Mathematical Expression of Contribution