banter blades sells machine blades with a unit contribution margin of $2.50 and

Question

banter blades sells machine blades with a unit contribution margin of $2.50 and a contribution margin ratio of 47%. which statement is true? a) each blade sold generates $2.50 to cover operating expenses and contribution to profit. b)each blade sold generates $2.50 of revenue to cover fixed cists and contribute to profit. c) each dollar of sales revenue generates 47 cents to cover fixed costs amd contribute to profit. d) each blade sold generate 47 cents to cover fixed costs and contribute to profit.

Explanation / Answer

Contibutin margin generally cover fixed costs and then contribute to profit. Contribution margin ratio denotes each dollar of sales revenue generates 47 cents to cover fixed costs amd contribution to profit.

Thus out of the below options, the correct answer is:

c) each dollar of sales revenue generates 47 cents to cover fixed costs amd contribute to profit.

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