Contribution Margin Ratio Is Computed by Dividing

question 192

Multiple Choice

Contribution margin ratio is computed by dividing

• A) contribution margin by sales revenue.
• B) contribution margin by operating income.
• C) sales revenue by contribution margin.
• D) operating income by contribution margin.

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Definitions:

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated as the beginning inventory plus purchases minus the cost of goods sold.

Goods Available for Sale

The total quantity of goods that a company has at its disposal to sell during a certain period, including both its initial inventory and purchases made.

Inventory Safeguarding

Measures and controls implemented by a business to protect its inventory from loss, theft, or damage.

Locked Warehouse

A secured storage facility used to hold goods or collateral, often for financial arrangements or until customs duties are settled.