Compute the contribution margin ratio.

A) 40.0%.
B) 66.7%.
C) 20.7%.
D) 50.0%.
E) 19.3%.

Contribution Margin Ratio

The percentage of revenue remaining after deducting variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.

Variable Costs

Expenses that fluctuate with the level of production output, such as raw materials and direct labor.

Fixed Costs

Expenses that remain constant in total amount irrespective of fluctuations in the activity level of a business, e.g., insurance premiums.