The formula for the contribution margin ratio is
A)contribution margin divided by sales.
B)contribution margin divided by net income.
C)contribution margin divided by gross profit.
D)contribution margin divided by (sales less variable costs).

Question

Quizplus · Accepted Answer

The contribution margin ratio is calculated by dividing the contribution margin (sales less variable costs) by sales. This ratio indicates the percentage of each sales dollar available to cover fixed costs and generate profit.

The Formula for the Contribution Margin Ratio Is