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View Full Version : What is the company's contribution margin ratio?


Noelle24
Mar 19, 2008, 07:35 PM
What is the company's contribution margin ratio?

Sales $1,200,000
Variable expenses 800,000
Contribution margin 400,000
Fixed expenses 300,000
Net operating income $100,000



sold 20000 units

morgaine300
Mar 20, 2008, 10:20 PM
A contribution margin ratio is just the contribution margin as a percent of sales. And to find what percent one thing is of another, you always divide in that order.

CaptainForest
Mar 22, 2008, 04:52 PM
Contribution Margin Ratio = Contribution Margin / Total Sales

Contribution Margin = Sales – Variable Cost

CM Ratio = 400,000 / 1,200,000
CM Ratio = 33.33%