In cost-volume-profit analysis, the contribution margin per unit is:Multiple ChoiceThe same as the contribution margin ratio.Selling price per unit less total cost per unit.Selling price per unit less variable costs per unit.Selling price per unit less fixed costs per unit.Selling price per unit less cost of goods sold per unit.
Question
In cost-volume-profit analysis, the contribution margin per unit is:Multiple ChoiceThe same as the contribution margin ratio.Selling price per unit less total cost per unit.Selling price per unit less variable costs per unit.Selling price per unit less fixed costs per unit.Selling price per unit less cost of goods sold per unit.
Solution
The correct answer is: Selling price per unit less variable costs per unit.
Here's why:
Cost-Volume-Profit (CVP) analysis is a method of cost accounting that looks at the impact that varying levels of costs and volume have on operating profit. The contribution margin is a product's price minus all associated variable costs, resulting in the incremental profit earned for each unit sold.
So, the contribution margin per unit in CVP analysis is calculated by subtracting the variable cost per unit from the selling price per unit. This gives the profit contribution per unit sold, not taking into account fixed costs.
Similar Questions
The contribution margin per unit equals:Group of answer choicesselling price - fixed costs per unitselling price - variable costs per unitfixed cost - contribution margin ratioselling price - costs of good sold
The contribution margin ratio:Multiple ChoiceIs the percent of each sales dollar that remains to cover the variable and fixed costs.Cannot be used in conjunction with other analytical tools.Is the same as the contribution margin per unit.Is the percent of each sales dollar that remains after deducting the unit variable cost.Is the percent of each sales dollar that remains after deducting the unit fixed cost.
The difference between selling price per unit and variable costs per unit is the:Multiple ChoiceGross margin per unit.Fixed cost per unit.Margin of safety per unit.Contribution margin per unit.Gross profit from sales.
The contribution margin ratio can be calculated as:Group of answer choicestotal contribution margin divided by total sales.contribution margin per unit multiplied by selling price per unit.all of the options are correct.total sales divided by total contribution margin.
If the contribution margin per unit is $15 and selling price per unit is $20, the contribution margin ratio is:
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