Question: What do we mean by the contribution margin and contribution margin ratio ? Contribution Margin = Total Revenue all variable costs Contribution Margin Ratio =

What do we mean by the contribution margin and contribution margin ratio?

Contribution Margin = Total Revenue all variable costs

Contribution Margin Ratio = Contribution Margin per unit/Unit Selling Price

The contribution margin ration the percent of revenue available for fixed costs after the variable costs are accounted for.

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