Explain the concept of a contribution margin and describe how it differs from gross margin. Also, what is the significance of the contribution margin ratio, and how is the ratio useful in planning business operations? Provide examples.

Q: Contribution margin ratio definition and how is useful in planning business operations?

A: Solution:- Contribution margin ratio definition as follows:-

Q: What information is conveyed by a cost-volume-profit graph in addition to a company’s break-even…

A: Cost-volume-profit graph (CVP):   Cost-volume-profit graph is a graphical representation of volume…

Q: Which of the following underlying assumptions form(s) the basis for cost-volume-profit analysis?…

A: Under CVP analysis, the effect of variable cost and fixed cost on profitability is to be determined.…

Q: If a system of equations contains a cost equation, and a revenue equation, the solution for the…

A: System of equation is a set of equation which helps in solving the variable in the equation. If…

Q: The systematic examination of the relationships among selling prices, volume of sales and…

A: It is significant for every busines to analyse the quantity to be sold for achieving break even and…

Q: In evaluating the profit center manager, the operating income should be compared a.across profit…

A: Operating income is the amount of money earned by an entity from its operations.

Q: a) Use activity-based costing to estimate the cost of preparing: i A wage and salary tax return. ii…

A: Activity-based costing (ABC):   Activity based costing (ABC) framework was created to manage the…

Q: How do managers decide whether a cost is adirect or an indirect cost?

A: Cost refers to the amount of money incurred for acquiring a product or manufacturing a product. Cost…

Q: What of the following is NOT a Benefit of Activity Based Management? a.It assists in the budgeting…

A: Introduction:- Activity Based Management analyzing a company's business activities through…

Q: Explain why is important for a business to understand their composite mix of products when…

A: Sales mix is the proportion of sales in quantity with respect to total sales quantity. It is…

Q: What is the company’s contribution margin (CM) ratio?

A: Contribution margin is the amount of sales revenue left after charging variable expenses.…

Q: Define the term gross profit margin. Explain several waysin which management might improve a…

A: Gross profit: It can be defined as the excess of a company's net sales revenue over its cost of…

Q: Why do many operating managers prefer a contribution income statement instead of a traditional…

A: Traditional income statement: Traditional income statement is a financial statement that shows the…

Q: What is the meaning of contribution margin ratio? How is this ratio useful in planning…

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Q: Should a firm have a firm grasp of the concepts of differential cost, opportunity cost and sunk cost…

A: Costs: It refers to the monetary value of expenditures incurred for carrying out operating and…

Q: The difference between informal and formal business selling

A: Informal and Formal Business : Formal business is a business that is well formalised and its goals…

Q: “A financial productivity measure contains more information than an operational productivity measure…

A: Introduction: Operational productivity is the ratio of output units to input units, and physical…

Q: What is the difference between the selling price,cost of sales and labour costs of an informal and…

A: The abbreviations CP and SP stand for Cost Price and Selling Price, respectively. The cost price of…

Q: Difference of the cost price selling price and labour price of informal and formal business

A: For Difference of the cost price selling price and labour price of informal and formal business…

Q: When conducting a cost-volume-profit analysis determine where the most challenges for accountant…

A: Cost Volume Profit Analysis (CVP Analysis): This analysis is helpful in determining how any type of…

Q: How does the cost system affect the financial position of the firm?

A: Cost system is the system which is designed to evaluate the monitor the cost incurred by the…

Q: Explain what cost behavious is and why it is important for business?

A: Cost Behavior is the change in the behavior of a cost (or costs) due to a change in business…

Q: List the advantages and disadvantages of different types of business. Explain the various costs…

A: Business organization refers to the formation of an entity with an objective to have higher profits…

Q: A business that is just starting out and is uncertain about what the sales levels will be would…

A: Fixed cost is the cost that does not change with the change in the output. Whereas, variable cost…

Q: A cost center is a responsibility center of a company which incurs losses. incurs costs and…

A: A cost center definitely incurs some cost to the business.

Q: What is meant by customer-profitability analysis? Give an example of an activity that might be…

A: Customer Profitability Analysis:  It is the process of ascertaining the amount of revenue earned…

Q: What is cost principle and give example of business situation of it

A: The cost principle is an accounting principle that requires assets, liabilities, and equity…

Q: What is a company’s cost structure? How can cost structure affect a company’s profits?

A: Company's cost structure expresses the proportion of fixed costs to variable cost. Cost structure…

Q: Why performance ratio in a business or company is important?? *Purpose of performance ratio?…

A: Performance Ratio: The performance ratio, often known as PR, compares the actual production for a…

Q: In making short-term business decisions, what should you do? Use a traditional costing approach.…

A: Business decision refers to large part of conducting business is making decisions.

Q: how important does the owner /manager believe cost information is the success of the business?

A: Cost accounting is an accounting system which provides information about all the costs incurred in…

Q: Which of the following costs are irrelevant to business decisions? a. Avoidable costs b. Costs that…

A: Irrelevant cost: Irrelevant cost does not affect the decision making since they are not in the…

Q: Using performance reports to evaluate cost, revenue, and profit centers Management by exception is a…

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Q: Companies benefit greatly from the use of a standard cost system, and the statement

A: This question deals with  the use of a standard cost system, and the statemen

Q: Differentiate between selling price,cost of sales and labour costs in informal and formal business.

A: Registered (or unregistered), organized (or unorganized), and supervised (or unregulated) companies…

Q: How can you show how efficiency ratios can be used to determine the best way to conduct the…

A: Lets understand the basics. Ratios are calculated by the management to compare the company's current…

Q: components of the Contribution Margin Income Statement, how does management use this in the decision…

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Q: What are the benefits enjoyed by tourism firm by adopting cost accounting?

A: cost accounting -    cost accounting is the recording classifying summarizing and analyzing the…