Question
____________ = (sales value – variable cost)/ Sales
valueSolution
The price volume ratio (contribution margin ratio) represents the percentage of sales revenue that contributes to covering fixed costs and generating profits after deducting variable costs. It indicates the proportion of each sales dollar that is available to contribute to the company's profitability. This ratio is a valuable measure for businesses to understand their cost structure and how changes in sales volume can impact their profits.
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Question figure
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