Answer:
Contribution margin ratio = 20%
Explanation:
We know, contribution margin is the difference between sales revenue and variable expenses, while the contribution margin ratio expressed as a parentage between the contribution margin and company sale.
We know,
contribution margin ratio = (contribution margin ÷ sales revenue) × 100
Given,
Contribution margin = $17,600
sales revenue = $88,000
Putting the value into the formula, we can get
contribution margin ratio = ($17,600 ÷ $88,000) × 100
or, contribution margin ratio = 0.2 × 100
Contribution margin ratio = 20%
