Contribution to Sales Ratio Formula

Steps:

• Calculate contribution per unit: Selling price minus variable cost = $30 -$14 = $16.
• Divide contribution by selling price: $16 /$30 = 0.5333.
• Convert to percentage: 0.5333 × 100 = 53.3%.
• Total cost ($24) is irrelevant, as ratio uses only variable costs.

Why C is correct:

• Contribution to sales ratio is defined as (selling price - variable cost) / selling price × 100, equaling 53.3%.

Why the others are wrong:

• A: Uses total cost instead of variable: ($30 -$24) / $30 = 20%.
• B: Equals variable cost ratio: $14 /$30 ≈ 46.7%.
• D: Equals total cost ratio: $24 /$30 = 80%.

Final answer: C