Which of the following formulas is used to calculate the contribution margin ratio
A)(Sales - Fixed expenses)/Sales
B)(Sales - Cost of goods sold)/Sales
C)(Sales - Variable expenses)/Sales
D)(Sales - Total expenses)/Sales

Question

Quizplus · Accepted Answer

Contribution margin is the difference between sales and variable expenses, and the contribution margin ratio is calculated by dividing the contribution margin by the sales. Option C represents the correct formula for calculating the contribution margin ratio. Option A represents the formula for calculating the operating income ratio (also known as the profit margin ratio), while option B represents the formula for calculating the gross profit margin ratio. Option D is not a valid formula for calculating the contribution margin ratio.

Which of the Following Formulas Is Used to Calculate the Contribution