Question

EB3.

LO 3.1A product has a sales price of $175 and a per-unit contribution margin of $75. What is the contribution margin ratio?

Answer 1

42.86%

Step-by-step explanation:

The contribution margin ratio shows a relationship between the contribution margin and the sales price which is presented below:

Contribution margin ratio = (Contribution margin per unit) ÷ (selling price per unit) × 100

= ($75) ÷ ($175) × 100

= 42.86%

We simply divide the contribution margin per unit by the selling price so that the ratio can come