If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, what is the contribution margin ratio?

A) 38%
B) 26.8%
C) 11.8%
D) 62%

Contribution Margin Ratio

The percentage of sales revenue that exceeds variable costs, indicating the portion available to cover fixed costs and generate profit.

Operating Income

Income generated from a company's ongoing, core business operations, excluding deductions of interest and taxes.

Variable Costs

Costs that vary directly with the level of production or business activity.