COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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revenue minus period cost
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revenue minus product cost
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revenue minus variable cost
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revenue minus fixed cost
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Detailed explanation-1: -Contribution margin is calculated as Revenue-Variable Costs. The contribution margin ratio is calculated as (Revenue-Variable Costs) / Revenue.
Detailed explanation-2: -Contribution margin is the revenue remaining after subtracting the variable costs that go into producing a product. Contribution margin calculates the profitability for individual items that a company makes and sells.
Detailed explanation-3: -The contribution margin is calculated by subtracting the total variable costs from the total sales revenue. The formula is: Contribution Margin = Total Sales Revenue – Total Variable Costs.
Detailed explanation-4: -The answer is False. The contribution margin is equal to the selling price minus the average variable cost (variable cost per unit).