Which of the Following the Correct Formula for Calculating Contribution

question 2

Multiple Choice

Which of the following the correct formula for calculating contribution margin ratio?

• A) Contribution margin ratio = Contribution margin + Net sales revenue
• B) Contribution margin ratio = Contribution margin / Net sales revenue
• C) Contribution margin ratio = Contribution margin × Net sales revenue
• D) Contribution margin ratio = Contribution margin - Net sales revenue

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Definitions:

Straight-line Depreciation

A technique for distributing the expense of a physical asset uniformly throughout its estimated useful duration.

Annual Net Income

The total earnings of a company after all expenses and taxes have been deducted from revenue in a fiscal year.

Tax Rate

The segment of an individual's or corporate's earnings or profits that is taxed.

Net Working Capital

Net working capital is a measure of a company's liquidity, calculated as the difference between its current assets and current liabilities.