How do you calculate contribution margin percentage?
Understand the Problem
The question is asking how to determine the contribution margin percentage, which involves understanding the relationship between sales revenue, variable costs, and contribution margin. We will calculate it by using the formula: Contribution Margin Percentage = (Contribution Margin / Sales Revenue) x 100.
Answer
(Contribution Margin / Selling Price) * 100
The final answer is (Contribution Margin / Selling Price) * 100
Answer for screen readers
The final answer is (Contribution Margin / Selling Price) * 100
More Information
Contribution margin percentage helps businesses understand the percentage of revenue that exceeds variable costs, which can be used to cover fixed costs and generate profit.
Tips
Avoid confusing variable and fixed costs when performing the calculation to ensure accuracy.
Sources
- The web page with info on - Wall Street Prep - wallstreetprep.com
- Contribution Margin: Definition, Overview, and How To Calculate - Investopedia - investopedia.com
- Contribution Margin Ratio: What It Is and How to Calculate It - American Express - americanexpress.com
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