Chapter 21, Problem 5QS

To determine

Introduction:

Contribution Margin Ratio is calculated by dividing Contribution Margin by Total Sales. It is the difference between Selling Price and Total Variable Costs expressed as a percentage. It depicts the percentage of Revenue available to cover Fixed Cost and yield profits.

Sales is the operating revenue company earns by selling its products in the market.

Variable Costs are expenses that increase in proportion to the Sales i.e. these vary with the level of production. As production increase, there is an increment in Variable costs and vice-a-versa.

Contribution Margin Ratio for the concern