COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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cost price-selling price
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fixed costs-variable costs
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selling price-variable cost
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selling price-cost price
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Detailed explanation-1: -The contribution margin can be stated on a gross or per-unit basis. It represents the incremental money generated for each product/unit sold after deducting the variable portion of the firm’s costs. The contribution margin is computed as the selling price per unit, minus the variable cost per unit.
Detailed explanation-2: -Since you have the contribution margin ratio, you must identify the variable cost ratio and use that figure to determine the total sales. To do so, subtract the contribution margin ratio from 100 to determine the variable cost ratio, and then divide the variable cost amount by that percentage.
Detailed explanation-3: -A contribution margin measures how profitable a product is to produce. A company’s contribution margin shows how much revenue is available after it deducts variable costs like raw materials and transportation expenses.