COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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contribution margin percentage will be higher than expected.
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per-unit contribution margin will be lower than expected.
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total variable costs will be lower than expected.
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total contribution margin will be higher than expected.
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Detailed explanation-1: -Answer: 15% increase in variable costs would decrease the unit contribution margin the most.
Detailed explanation-2: -Answer and Explanation: The contribution margin per unit is the price at which a unit must be sold for the company to break even. The statement is FALSE. A product’s contribution margin is the difference between its selling price per unit and its variable cost.
Detailed explanation-3: -Answer and Explanation: As the contribution margin per unit decreases, the break-even will increase. There is an inverse relationship between the contribution margin per unit and break-even point.
Detailed explanation-4: -Which of the following statements is true if the sales price per unit decreases while the variable cost per unit and total fixed costs remain constant? The contribution margin decreases and the breakeven point increases.