Which of the Following Statements Best Defines the Contribution Margin

question 114

Multiple Choice

Which of the following statements best defines the contribution margin ratio?

• A)Total contribution margin divided by total sales.
• B)Unit contribution margin divided by unit sales price.
• C)Total contribution margin divided by total sales and unit contribution margin divided by unit sales price.
• D)None of the answers is correct.

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Definitions:

Average Total Cost

The sum of all production expenses divided by the amount of goods produced.

Perfectly Competitive

A market structure where many firms offer products that are similar and entry into the market is relatively easy.

Market Price

The present cost at which a product or service is available for purchase or sale in a specific market.

Optimal Short-Run Output

The level of production that maximizes profit or minimizes loss in the short term.