September 2023 Write a 50 word minimum peer responses each to of the two answers Those answers are
2024 Two peer responses. Assignment Help
Write a 50 word minimum peer responses each to of the two answers Those answers are 2023
Write a 50 word minimum peer responses each to of the two answers. Those answers are for the question: ” What is meant by a product’s contribution margin ratio? How is the ratio useful in planning business operations?” ____________ Answer 1. The contribution margin ratio is the percentage of sales, service revenues, or selling price that remains after all variable costs and variable expenses have been covered. The contribution margin ratio of a product shows how the contribution margin will be affected by a change in total sales. This ratio is used in cost-profit calculations, such as target profit and break even analysis serving its purpose as a beneficial business tool. The contribution margin ratio also can be used to determine what percentage of sales need to increase to reach a specific target profit or contribution margin. The contribution margin ratio is extremely useful in planning business operations. However, it differs from the gross margin ratio, in that it cannot be calculated directly from a company’s external income statement. A business would value using the contribution margin ratio when a company needs to determine the percentage of sales leftover after expenses. ********* Answer 02. A product’s contribution margin ratio is thew contribution margin as a percentage of sales. This is calculated taking the contribution margin and divide by sales. This is useful in planning business operation because it allows you a to see that for every dollar made, the net operating cost will increase by that percentage. This allows a company to see what kind of profits they would be making. If a company only made one product, they could use this formula to calculate the CM ratio per unit. This would help determine how many units to produce and sell to increase their profits. If a company is planing an increase in sales, this ratio allows them to determine their increase in operating expenses as well. By using this ratio correctly, it could help a company to know when to grow and produce more, or to wait because the costs would not yield enough profit that they are seeking. ———- Each responses should be written separately.