Contribution margin ratio

Contribution margin ratio is contribution margin expressed as a fraction of sales revenue, showing what percentage of each euro of revenue remains after variable costs to cover fixed costs and profit.

Also known asCM ratio

ByHoang TruongUpdated June 30, 2026

FrameworkCost-volume-profit (CVP) analysis

See it move

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A dial gauge pointing to 36% shows the contribution margin ratio for a product priced at €50 with a variable cost of €32. The margin of €18 divided by the selling price of €50 equals 36%, meaning every euro of sales leaves €0.36 to cover fixed costs and, once those are fully recovered, to generate profit.

Where it fits

SubjectCost AccountingCoreTopicCost-Volume-Profit AnalysisCore

The formula

LaTeX

CMR = \frac{CM}{p}

Variables

$C M$: contribution margin per unit (€ per unit)
$p$: selling price per unit (€ per unit)

Expressed as a decimal or percentage; shows what proportion of each euro of revenue remains after all variable costs.

LaTeX

\text{BEP}_{\text{revenue}} = \frac{FC}{CMR}

Variables

$F C$: total fixed costs (€)
$C M R$: contribution margin ratio (decimal)

Check yourself

PracticeCORE

A firm sells a single product at €80 per unit with variable costs of €48 per unit and total fixed costs of €96,000. What is the contribution margin ratio, and what is the break-even revenue?

Select an answer to check your understanding.