Asked by
Shawntavia Vaughn
on Nov 12, 2024
Verified
If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 40%.
Contribution Margin Ratio
The percentage of each sales dollar that is available to cover the fixed costs and provide an operating income.
Variable Costs
Costs that change in proportion to the level of activity or volume of goods produced in a business.
- Compute break-even points and appreciate their role in business decision-making processes.
- Appreciate the consequences of changes in cost components on an organization's financial performance.
Verified Answer
JE
Learning Objectives
- Compute break-even points and appreciate their role in business decision-making processes.
- Appreciate the consequences of changes in cost components on an organization's financial performance.