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Q System Admin Max Points: 5.0 What is meant by a product's contribution margin ratio? How is this ratio useful in planning business operations? Cite any references used. Participate in follow-up discussion by reviewing your classmates' posts, adding additional information, asking questions, or responding to follow-up questions posed by your instructor.

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Contribution margin ratio is a very interesting concept and a popular one too. By contribution we mean, sales minus variable cost. This is the preliminary profit that the firm makes. In other words, the contribution does contain fixed cost that is to be recovered later (Freedman, 2018). Now when we are talking about the contribution ratio, the ratio can be expressed as contribution divided by sales. This ratio is very useful in practical world. For example