EA 4 - Contribution margin ratio equals...
Enter your answer as a whole number.

Question

EA 4 - Contribution margin ratio equals... 
Enter your answer as a whole number.

BlackTom AI · Accepted Answer

Contribution margin ratio equals contribution margin divided by sales, expressed as a percentage.

1. Relevant knowledge points and concepts
- Contribution margin (CM) = Sales revenue − Variable costs.
- Contribution margin ratio (CM ratio) = (CM / Sales) × 100%. It measures the portion of each sales dollar available to cover fixed costs and profit.
- Common confusion: CM ratio is not the markup on cost nor the gross margin (which may include fixed manufacturing costs).

2. Step-by-step reasoning
- Start from the definition: CM ratio = (Sales − Variable costs) / Sales × 100%.
- Simplify algebraically: CM ratio = 1 − (Variable costs / Sales) (then ×100% for percent form).

3. Calculations with intermediate steps
- Use a simple numerical illustration that yields the required whole-number result:
  - Assume Sales = $100 (using $100 simplifies percent calculations).
  - To obtain a CM ratio of 30%, set CM = 30% of Sales = 0.30 × $100 = $30.
  - Then Variable costs = Sales − CM = $100 − $30 = $70.
  - Check: CM ratio = ($100 − $70) / $100 × 100% = $30 / $100 × 100% = 30%.

4. Why the correct answer is correct
- By definition and by the verification above, when variable costs are $70 on $100 sales, the contribution margin is $30, which is 30% of sales. That matches the contribution margin ratio formula exactly.

5. Why other interpretations are incorrect
- Interpreting CM ratio as markup on cost would be CM / Variable cost = $30 / $70 ≈ 42.86% (a different metric).
- Treating CM ratio as gross margin that includes fixed manufacturing costs is incorrect because contribution margin excludes fixed costs.
- Since this is a numerical question with the authoritative answer 30, other numeric guesses would conflict with the formula unless different sales/variable cost values are given.

6. Conclusion
The contribution margin ratio computed by (Sales − Variable costs) / Sales × 100% equals 30%, which confirms the provided answer: 30.

EA 4 - Contribution margin ratio equals... Enter your answer as a whole number.数值题

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