Compute and interpret the contribution margin ratio using the following data: sales, $100,000; total variable cost, $60,000.

Question:

Compute and interpret the ratio using the following data: sales, $100,000; total variable cost, $60,000.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...