Managerial Accounting (15th Edition)

Published by McGraw-Hill Education
ISBN 10: 007802563X
ISBN 13: 978-0-07802-563-1

Chapter 5 - Cost-Volume-Profit Relationships - Questions - Page 215: 5-1

Answer

The contribution margin ratio is the ratio computed by dividing contribution margin by dollar sales. Contribution margin ratio shows the change in contribution margin that will result from a change in total sales. This ratio is extremely helpful in forecasting contribution margin and net operating income.

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