ENTREPRENEURIAL PLANNING
FINANCIAL PLANNING AND ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False Contribution per unit is the level of output at which the business is making neither a profit or a loss ____
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Either A or B
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None of the above
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Detailed explanation-1: -Also known as dollar contribution per unit, the measure indicates how a particular product contributes to the overall profit of the company. It provides one way to show the profit potential of a particular product offered by a company and shows the portion of sales that helps to cover the company’s fixed costs.
Detailed explanation-2: -Contribution margin is the amount of revenue left over after all variable costs have been deducted from total sales. It is a measure of the profitability of individual products or services. Profit margin, on the other hand, is the amount of net income divided by total sales.
Detailed explanation-3: -To calculate the formula for the unit contribution margin expressed as a dollar value, use revenues per unit subtracted by variable expenses per unit. To express this as a percentage ratio, take the resulting number and divide it by the revenues per unit.