Contribution Margin Ratio
The Contribution Margin Ratio is Contribution Margin divided by sales.
This ratio, sometimes called the Profit-Volume Ratio, indicates the percent of each sale that can go towards paying fixed costs like rent and supervisors’ salaries. For example, if I sold shoes for $30 a pair and the Contribution Margin for each pair was $10, my Contribution Ratio would be $10/$30 or 33%. 33% of each sales dollar will go toward paying the rent and other fixed costs.
Sign Up to Learn More!
Join our mailing list today to get notified of new discount offers, course updates, Roger CPA Review news, and more!