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How Do You Find The Contribution Margin Ratio?

April 26, 2017budget Business contribution Management managing margin ratio

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How Do You Find The Contribution Margin Ratio?

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The contribution margin (CM) ratio is used in cost-volume-profit analysis. The contribution margin (CM) ratio is: contribution margin (CM) ratio = contribution margin/sales This article demonstrates through example how to find the contribution margin (CM) ratio of a company with the information provided in the problem below: QWERTY company had sales revenue of $200,000 with variable expenses of $125,000. Fixed expenses were $65,000. Gather all the information needed to find the contribution margin (CM) ratio. sales = $200,000 variable expenses = $125,000 fixed expenses = $65,000 If the contribution margin is not already known, calculate the contribution margin. contribution margin = sales – variable expenses contribution margin = $200,000 – $125,000 contribution margin = $75,000 Plug the information into the formula to find the contribution margin (CM) ratio. contribution margin (CM) ratio = contribution margin/sales contribution margin (CM) ratio = $75,000/$200,000 Solve to find the c