The expression Cm × percent of sales is best described as:

The expression Cm × percent of sales is best described as:

• A. Cm plus percent of sales
• B. Cm × percent of sales
• C. Percent of sales
• D. Cm minus percent of sales

Answer: (B)

The idea here is to treat percent of sales as a fraction and apply it to a contribution margin figure. Cm represents the amount of contribution margin, and the percent of sales tells you what portion of total sales you’re looking at. Multiplying Cm by that percentage scales the contribution margin to that specific share of sales, giving the portion of contribution margin attributable to that portion. This is useful in analyses where you want to allocate or estimate how much contribution margin comes from a particular segment or mix of sales, rather than the whole. For example, if the contribution margin per unit is a fixed amount and a segment accounts for 40% of sales, Cm × 40% gives the contribution margin that portion would generate. The other options don’t capture this scaling idea: they would imply simply adding, subtracting, or presenting only the percentage without applying it to the contribution margin.

The idea here is to treat percent of sales as a fraction and apply it to a contribution margin figure. Cm represents the amount of contribution margin, and the percent of sales tells you what portion of total sales you’re looking at. Multiplying Cm by that percentage scales the contribution margin to that specific share of sales, giving the portion of contribution margin attributable to that portion.

This is useful in analyses where you want to allocate or estimate how much contribution margin comes from a particular segment or mix of sales, rather than the whole. For example, if the contribution margin per unit is a fixed amount and a segment accounts for 40% of sales, Cm × 40% gives the contribution margin that portion would generate.

The other options don’t capture this scaling idea: they would imply simply adding, subtracting, or presenting only the percentage without applying it to the contribution margin.