Asked by James O'Connor on May 09, 2024
Verified
The contribution margin ratio is the
A) same as the variable cost ratio
B) same as profit
C) portion of equity contributed by the stockholders
D) same as the profit-volume ratio
Contribution Margin Ratio
A profitability ratio that measures the percentage of sales revenue that exceeds variable costs, indicating how much contributes to fixed costs and profit.
Variable Cost Ratio
A measure of a company's variable costs as a percentage of sales, which shows the proportion of sales that is consumed by variable costs.
Profit-Volume Ratio
A measure that illustrates how profits will change with a change in volume, showing the relationship between profit and sales levels.
- Utilize cost-volume-profit analysis for making business decisions.
- Assess and execute approaches considering the contribution margin's influence on profitability.
Verified Answer
Learning Objectives
- Utilize cost-volume-profit analysis for making business decisions.
- Assess and execute approaches considering the contribution margin's influence on profitability.
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