Question

The variable cost ratio explains the percentage of sales revenue​ that: A. contributes towards contribution margin B. contributes towards variable costs C. contributes towards fixed costs and generating a profit D. contributes towards product costs

Answer 1

Answer:

B. contributes towards variable costs

Explanation:

We know that,

Variable expense ratio = Variable expense ÷ Sales revenue.

From the above formula, we can understand that the Variable expense ratio comes from dividing variable expenses by sales.

Therefore, option B is correct. So the variable expense ratio cannot contribute towards contribution margin, fixed costs, and product costs.