Asked by Joshua Reavis on May 05, 2024
Verified
The contribution margin ratio is the same as the profit-volume ratio.
Contribution Margin Ratio
A financial metric that shows the percentage of sales revenue that exceeds variable costs, contributing to covering fixed costs and generating profit.
Profit-volume Ratio
A measure that indicates the relationship between the profit generated by a business and its sales volume, usually expressed as a percentage.
- Determine the contribution margin ratio and appreciate its relevance in CVP analysis.
Verified Answer
SF
Sikdar FahimaMay 07, 2024
Final Answer :
True
Explanation :
The contribution margin ratio and profit-volume ratio are the same thing and they both represent the percentage of contribution margin or profit generated from each dollar of sales.
Learning Objectives
- Determine the contribution margin ratio and appreciate its relevance in CVP analysis.