Contribution-to-sales ratio
The contribution-to-sales ratio is contribution divided by sales revenue, expressed as a percentage. It shows the amount of each sales dollar available to cover fixed costs and profit under the assumed cost and sales mix. It can be calculated per unit or in total if the mix is consistent. It is useful for break-even revenue and target-profit calculations, but a changing product mix can change the weighted ratio.
Worked example
Price $25 and variable cost $15 give contribution $10 and a C/S ratio of 40%. Fixed costs of $8,000 require break-even revenue of $8,000 ÷ 0.40 = $20,000.
Common mistake
The P/V ratio means contribution-to-sales in this costing usage, not final profit divided by sales.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Supporting | September 2026–June 2027 |
| ACCA | PM | Direct | September 2026–June 2027 |
| ACCA | SBL | Supporting | September 2026–June 2027 |
| FIA | FMA | Supporting | September 2026–June 2027 |