Question
Contribution margin indicates a. the number of units that must be sold to break-even. b.&nb
Contribution margin indicates
a. the number of units that must be sold to break-even.
b. the amount that the sales price per unit exceeds the (product) cost of the unit.
c. the amount that the sale of each additional unit contributes toward the payment of selling and administrative costs.
d. the amount that the sale of each additional unit contributes toward net income.
Homework Answers
Answer #1
ANSWER:
Answer is option d.
Contribution margin indicates the amount that the sale of each additional unit contributes toward net income.
Explanation:
Contribution margin represents the incremental money generated for each product or unit sold after deducting variable cost from the sale price of the product or unit. It indicates how a product contributes to the overall profit of the company. It provides potential of profitability of a product and indicates the portion of sales that help to cover the company's fixed costs.
Following is the formula of Contribution Margin:
Contribution Margin = Sales Revenue - Variable Cost
Generally Contribution Margin is expressed as a ratio.
Therefore,
Not the answer you're looking for?
Similar Questions
Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.'s...
Break-Even Units, Contribution Margin Ratio, Multiple-Product
Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of
450,000 units) for the coming year is as follows:
Total
Sales
$11,700,000
Total variable cost
8,190,000
Contribution margin
$3,510,000
Total fixed cost
2,254,200
Operating income
$1,255,800
Required:
1(a). Compute variable cost per unit. Round
your answer to the nearest cent.
$per unit
1(b). Compute contribution margin per unit.
Round your answer to the nearest cent.
$per unit...
Hide or show questions Progress:10/29 items Calculator Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of...
Hide or show questions
Progress:10/29 items
Calculator
Break-Even Units, Contribution Margin Ratio, Multiple-Product
Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of
450,000 units) for the coming year is as follows:
Total
Sales
$ 9,000,000
Total variable cost
5,310,000
Contribution margin
$ 3,690,000
Total fixed cost
2,476,400
Operating income
$ 1,213,600
Required:
1(a). Compute variable cost per unit. Enter
your answer to the nearest cent.
$per unit
1(b). Compute contribution margin per...
At the break-even point sales equal total variable costs contribution margin equals total variable costs contribution...
At the break-even point
sales equal total variable costs
contribution margin equals
total variable costs contribution margin equals total fixed
costs
sales equal total fixed costs
2. The amount by which actual or expected sales exceeds
break-even sales is referred to as
contribution margin
unanticipated profit
margin of safety
target net income
Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.'s...
Break-Even Units, Contribution Margin Ratio, Multiple-Product
Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of
450,000 units) for the coming year is as follows:
Total
Sales
$ 11,700,000
Total variable cost
6,669,000
Contribution margin
$ 5,031,000
Total fixed cost
2,871,024
Operating income
$ 2,159,976
Required:
1(a). Compute variable cost per unit. Enter
your answer to the nearest cent.
$per unit
1(b). Compute contribution margin per unit.
Enter your answer to the nearest...
Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.'s...
Break-Even Units, Contribution Margin Ratio, Multiple-Product
Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of
450,000 units) for the coming year is as follows:
Total
Sales
$ 11,700,000
Total variable cost
7,371,000
Contribution margin
$ 4,329,000
Total fixed cost
2,705,144
Operating income
$ 1,623,856
1(a). Compute variable cost per unit. Enter
your answer to the nearest cent.
$per unit
1(b). Compute contribution margin per unit.
Enter your answer to the nearest cent....
Break-Even Units, Contribution Margin Ratio, Margin of Safety Khumbu Company's projected profit for the coming year...
Break-Even Units, Contribution Margin Ratio, Margin of
Safety
Khumbu Company's projected profit for the coming year is as
follows:
Total
Per Unit
Sales
$3,331,250
$41.00
Total variable cost
999,375
12.30
Contribution
margin
$ 2,331,875
$ 28.7
Total fixed cost
1,009,369
Operating income
$ 1,322,506
Required:
1. Compute the break-even point in units. If
required, round your answer to nearest whole value.
units
2. How many units must be sold to earn a profit
of $240,000? If required, round your answer...
Break-Even Units, Contribution Margin Ratio, Margin of Safety Khumbu Company's projected profit for the coming year...
Break-Even Units, Contribution Margin Ratio, Margin of
Safety
Khumbu Company's projected profit for the coming year is as
follows:
Total
Per Unit
Sales
$2,030,000
$40.00
Total variable cost
568,400
11.20
Contribution margin
$ 1,461,600
$ 28.8
Total fixed cost
539,980
Operating income
$ 921,620
Required:
1. Compute the break-even point in units. If
required, round your answer to nearest whole value.
units
2. How many units must be sold to earn a profit
of $240,000? If required, round your answer...
Break-Even Units, Contribution Margin Ratio, Margin of Safety Khumbu Company's projected profit for the coming year...
Break-Even Units,
Contribution Margin Ratio, Margin of Safety
Khumbu Company's
projected profit for the coming year is as follows:
Total
Per Unit
Sales
$3,150,000
$45.00
Total variable cost
819,000
11.70
Contribution
margin
$2,331,000
$ 33.3
Total fixed cost
819,000
Operating income
$1,512,000
Required:
1.
Compute the break-even point in units. If required, round your
answer to nearest whole value.
______ units
2.
How many units must be sold to earn a profit of $240,000? If
required, round your answer to...
Break-Even Units, Contribution Margin Ratio, Margin of Safety Khumbu Company's projected profit for the coming year...
Break-Even Units, Contribution Margin Ratio, Margin of
Safety
Khumbu Company's projected profit for the coming year is as
follows:
Total
Per Unit
Sales
$1,700,000
$25.00
Total variable cost
476,000
7.00
Contribution
margin
$ 1,224,000
$ 18
Total fixed cost
504,560
Operating income
$ 719,440
Required:
1. Compute the break-even point in units. If
required, round your answer to nearest whole value.
units
2. How many units must be sold to earn a profit
of $240,000? If required, round your answer...
Break-Even Units, Contribution Margin Ratio, Margin of Safety Khumbu Company's projected profit for the coming year...
Break-Even Units, Contribution Margin Ratio, Margin of
Safety
Khumbu Company's projected profit for the coming year is as
follows:
Total
Per Unit
Sales
$3,543,500
$38.00
Total variable cost
1,133,920
12.16
Contribution margin
$ 2,409,580
$ 25.84
Total fixed cost
1,020,528
Operating income
$ 1,389,052
Required:
. Compute the break-even point in units. If
required, round your answer to nearest whole value.
units
2. How many units must be sold to earn a profit
of $240,000? If required, round your answer...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 2 minutes ago
asked 6 minutes ago
asked 10 minutes ago
asked 34 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago