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* 2. A 45% contribution margin ratio means that: 45% of the company's revenue is available to cover fixed costs and to contribute toward operating income. 55% of the company's revenue is consumed by fixed and variable costs. The company should contribute 45% of its operating income to qualified charities for maximum tax benefits. The company's revenue has increased by 45% during the current accounting period.

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Charles

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Solution :

A 45% contribution margin ratio means that "45% of the company's revenue is available to cover fixed costs and to contribute toward operating income".

Explanation:

This is because 45% contrubution margin is after deduction variable costs therefore, it will cover fixed costs and operating income.

Final Answer

First option ""45% of the company's revenue is available to cover fixed costs and to contribute toward operating income" is correct.

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