The Formula for the Contribution Margin Ratio Is

question 83

Multiple Choice

The formula for the contribution margin ratio is

• A)contribution margin divided by sales.
• B)contribution margin divided by net income.
• C)contribution margin divided by gross profit.
• D)contribution margin divided by (sales less variable costs).

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Definitions:

Operating Assets

Assets used in the day-to-day operations of a business, contributing to the generation of revenue.

Turnover

A financial metric indicating the rate at which inventory is sold or the rate at which employees leave and are replaced in a business.

Net Operating Income

The profit a company generates from its operations, excluding taxes and interest, calculated as revenues minus expenses.

Operating Assets

Assets used by a business in its day-to-day operations to generate revenue, excluding investments and non-essential assets.