The Contribution Margin Ratio Is the Portion of Every Sales

question 56

True/False

The contribution margin ratio is the portion of every sales dollar that contributes toward covering fixed costs and, ultimately, to profit.

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Definitions:

Machine Hour

A unit measure representing the operation of one machine for one hour, used in costing and operational efficiency analysis.

Plant Expansion

A process by which a company enlarges its operational capacity or adds to its production capabilities, possibly by acquiring more space, machinery, or buildings.

Total Amounts

The full quantities or sums reached by counting, calculating, or combining all parts.

Variable Costs Per Unit

Costs that vary directly with the level of production or volume of goods produced, altering according to the amount produced.