Smith Company sells a single product for $50. The variable expense per unit is $10 and the fixed expense per unit is $10 at the current level of sales. If one more unit is sold, the net operating income for the company will increase by $8.

True

False

.

Which of the following formulas is used to calculate the contribution margin ratio?

(Sales - Total expenses) / Sales

(Sales - Variable expenses) / Sales

(Sales - Fixed expenses) / Sales

(Sales - Cost of goods sold) / Sales