Contribution margin ratio

tasmith2 · #1 Mar 13, 2007, 08:50 AM

Im am trying to figure out how to compute contribution margin ratio. I found the sales mix percentage, but where do I go from there. You can use whatever numbers you want as long as you can give me a break down on how to compute the contribution margin ratio

CaptainForest · Mar 13, 2007, 07:47 PM

Sales 100
Variable Costs (60)
Contribution Margin 40
Fixed Costs (10)
Net Income 30

Contribution Margin = Sales – Variable Costs = 100-60 = 40
Contribution Margin Ratio = (Sales – Variable Costs) / Sales = (100-60) / 100 = 40%



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