alleryStart learning →A product selling for 100 dollars with a 60 dollar contribution margin has a contribution margin ratio of:
ASixty percent
BForty percent
CHundred percent
DNinety percent
Answer & Solution
Correct answer: A. Sixty percent
1. The ratio expresses the margin against the selling price.
2. The contribution margin ratio is the percentage of a unit's selling price.
3. It is the percentage that exceeds total unit variable costs.
4. Here 60 dollars is compared with a 100 dollar selling price.
5. That gives a contribution margin ratio of 60 percent.
_Source: OpenStax Principles of Accounting, Volume 2: Managerial Accounting (CC BY-NC-SA 4.0), Ch 3 'Cost-Volume-Profit Analysis'_
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