COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Sales price per unit minus all fixed cost
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Sales price per unit add all variable cost per unit
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Sales price per unit minus all variable cost per unit
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Sales price per unit add all fixed cost
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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: -Contribution margin per unit formula would be = (Selling price per unit – Variable cost per unit.
Detailed explanation-3: -The contribution margin is the difference between sales and variable costs. The amount that’s left over is the combination of fixed expenses and profit. So if the price of your product is $25 and the unit variable cost is $5, the unit’s contribution margin is $20.
Detailed explanation-4: -A contribution margin income statement is an income statement in which all variable expenses are deducted from sales to arrive at a contribution margin. Then, all fixed expenses are subtracted to arrive at the net profit or net loss for the period.
Detailed explanation-5: -Answer and Explanation: The contribution margin ratio is calculated as contribution margin divided by the sales multiplied by 100.