In cost accounting, how is the Contribution Margin per unit calculated?
ASelling Price per unit - Variable Cost per unit
BSelling Price per unit - Fixed Cost per unit
CSelling Price per unit - Total Cost per unit
DGross Profit - Operating Expenses
Explanation
* Contribution Margin per unit = Unit Selling Price – Unit Variable Cost.
* It measures the incremental revenue available per unit to cover total fixed expenses and generate net profit.
* Contribution Margin Ratio = Unit Contribution Margin / Unit Selling Price.
Exam Relevance
- Topic: Cost Accounting
- Subtopic: Cost-Volume-Profit (CVP) Analysis
No Comments