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Q. Calculate contribution to sales ratio?
Contribution per unit= sales price per unit less variable cost per unit
Break-even volume = Fixed overhead/Contribution per unit
The number of units you will need to sell in order to earn enough contribution to cover fixed overhead for example the number of units sold where contribution would equal fixed overhead.
The contribution to sales ratio (C/S ratio)
Contribution to sales (or C/S) ratio (also known as the profit-volume or P/V ratio) would calculate how much contribution a product will earn for every £1 of sales generated, expressed as a decimal or percentage. For illustration a 0.4 or 40% C/S ratio, would mean 40 pence of contribution is earned for each £1 of sales generated.
C/S ratio= Contribution per unit/Sales price per unit
C/S ratio= Total contribution/Total sales revenue
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