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Financial & Managerial Accounting
Found in: Page 833
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Compute and interpret the contribution margin ratio using the following data: sales, $5,000; total variable cost, $3,000.

Answer

The contribution margin ratio is 0.40 or 40%.

See the step by step solution

Step by Step Solution

Step-By-Step SolutionStep 1: Definition of Contribution Margin

The contribution margin is the financial metric reflecting the profit generated from the sales revenue over the variable cost incurred in the production process.

Step 2: Calculation of contribution margin ratio


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