ECONOMICS

Detailed explanation-1: -Contribution margin is the amount by which a product’s selling price exceeds its total variable cost per unit. This difference between the sales price and the per unit variable cost is called the contribution margin because it is the per unit contribution toward covering the fixed costs.

Detailed explanation-2: -The contribution is the total difference between the sales and the marginal cost of those sales. Hence, it can also be defined as an extra selling price over variable costs for each unit. 6) The point of profit at which the total cost will be equal to total revenue is called: a) Break-even point.

Detailed explanation-3: -The contribution margin is computed as the selling price per unit, minus the variable cost per unit. Also known as dollar contribution per unit, the measure indicates how a particular product contributes to the overall profit of the company.

Detailed explanation-4: -A variable cost is a corporate expense that changes in proportion to how much a company produces or sells. Variable costs increase or decrease depending on a company’s production or sales volume-they rise as production increases and fall as production decreases.

Detailed explanation-5: -Fixed cost is referred to as the cost that does not register a change with an increase or decrease in the quantity of goods produced by a firm. Variable cost is referred to as the type of cost that will show variations as per the changes in the levels of production.