# ECONOMICS

## COST ACCOUNTING

### BREAK EVEN POINT

 Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
What is meant by “total contribution”?
 A Contribution per unit / quantity B Quantity-Contribution per unit C Contribution per unit x quantity D Quantity / Contribution per unit
Explanation:

Detailed explanation-1: -Definition: Total Contribution is the difference between Total Sales and Total Variable Costs. Formulae: Contribution = total sales less total variable costs. Contribution per unit = selling price per unit less variable costs per unit.

Detailed explanation-2: -Contribution per unit is the residual profit left on the sale of one unit, after all variable expenses have been subtracted from the related revenue. This information is useful for determining the minimum possible price at which to sell a product.

Detailed explanation-3: -Contribution is the amount of earnings remaining after all direct costs have been subtracted from revenue. This remainder is the amount available to pay for any fixed costs that a business incurs during a reporting period. Any excess of contribution over fixed costs equals the profit earned.

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