Question

Is the contribution margin ratio of a grocery store likely to be higher or lower than that of a plastics manufacturer?

Answer 1

Contribution margin ratio is the ratio of contribution to sales. Contribution is received by subtracting the variable costs from sales. So, now if the variable costs are lower than it is likely to have greater contribution margin ratio and if the variable costs are higher then the contribution margin will be lower.

Now in case of grocery store the variable costs are likely to be less than the plastic manufacturer.
So, the contribution margin ratio of a grocery store is likely to be higher than a plastic manufacturer.