Contribution margin ratio is computed by
A)dividing contribution margin by operating income.
B)dividing contribution margin by sales revenue.
C)dividing sales revenue by contribution margin.
D)dividing operating income by contribution margin.

Question

Quizplus · Accepted Answer

Contribution margin ratio is calculated by dividing the contribution margin (sales revenue minus variable costs) by sales revenue. This ratio represents the percentage of sales revenue that is available to cover fixed costs and provide profits.

Contribution Margin Ratio Is Computed by