Is the contribution margin ratio of a software firm such as Microsoft likely to be higher or lower than the contribution margin ratio of an auto maker such as Ford What does this imply about the sensitivity of profit to sales ...

Software companies typically have a high proportion of fix ...

Is the contribution margin ratio of a software firm such as Microsoft likely to be higher or

Question:

Is the ratio of a software firm such as Microsoft likely to be higher or lower than the ratio of an auto maker such as Ford? What does this imply about the sensitivity of profit to sales?

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...