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how do you get contribution margin ratio?

how do you get contribution margin ratio?

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Answer #1

The contribution margin ratio is the difference between a company's sales and variable expenses,which is expressed as a percentage.

The total margin generated by an entity represents the total earnings available to pay for fixed expenses and generate a profit.

When used on an individual unit sale, the ratio expresses the proportion of profit generated on that specific sale.

  • Contribution margin ratio = contribution margin / sales, where contribution margin = sales – variable costs.
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