relationship showing variable costs as a percentage of sales. It is also 1 minus the CONTRIBUTION MARGIN (CM) ratio. An example follows:

                                                      Total                                Percentage
Sales                                           $37,500                                 100%
Less: Variable costs                       15,000                                   40
Contribution margin                       $22,500                                   60%

The variable cost ratio is 40% ($15,000/$37,500). It is also 1 minus the CM ratio, or 1 .6 = .4 = 40%.