The Contribution Margin Ratio

question 7

Multiple Choice

The contribution margin ratio:

• A)Is the percent of each sales dollar that remains after deducting the total unit variable cost.
• B)Is the percent of each sales dollar that remains after deducting the total unit fixed cost.
• C)Is the percent of each sales dollar that remains to cover the variable and fixed costs.
• D)Cannot be used in conjunction with other analytical tools.
• E)Is the same as the unit contribution margin.

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Definitions:

External Benefits

Positive effects of an economic transaction experienced by people or entities not directly involved in the transaction.

External Costs

Costs that are not borne by the producer or consumer but by third parties or society at large, such as pollution or resource depletion.

External Benefit

A positive effect on a party who did not choose to incur that benefit, often associated with public goods or services.

Public‐spirited

Exhibiting a selfless concern for the well-being of the community and the willingness to act for the public good.