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Contribution Margin Ratio | Contribution Margin Formula. The contribution margin ratio is the difference between a company's sales and variable expenses, expressed as a percentage. The total margin generated by an entity represents the total earnings available to pay for fixed expenses and generate a profit.o calculate the contribution margin ratio, divide the contribution margin by sales. The contribution margin is calculated by subtracting all variable costs from sales.
A product lineâs contribution margin ratio equals the difference between revenues and variable expenses divided by revenues. Itâs the percentage of each productâs revenue that contributes to paying your fixed costs.n a cash basis, divide $5,460 by the new contribution margin percentage of 37.5 percent to compute the required weekly revenue of $14,560, a $2,080 increase. Calculating contribution margin percentage and the BEP tells you what you have to do.