The contribution margin ratio is the percentage of sales, service revenues or selling price that remains after all variable costs and variable expenses have been covered. In other words, the contribution margin ratio is the percentage of revenues that is available to cover a company’s fixed costs, fixed expenses, and profit. (The contribution margin ratio is different from the gross margin ratio or gross profit percentage and cannot be computed directly from the reported amounts on the company’s external income statement.)
List the contribution margin ratio facts.
► Selling price per unit
► Fixed manufacturing costs per month
► Variable manufacturing costs per unit
► Fixed SG&A expenses per month
► Variable SG&A expenses per unit
► Fixed interest expense per month
