Contribution Margin:
Contribution margin is the excess of selling price over the variable costs of a product. It is a tool to evaluate the capability of the company to generate sufficient revenue so as to cover its variable cost.
Contribution Margin Per Unit:
Contribution margin is the excess of selling price per unit over the variable costs per unit of a product. It is a tool to evaluate the profitability of a given product.
Contribution Margin Percentage:
Contribution margin percentage is the excess of selling price over variable cost demonstrated in percentage.
To explain: Contribution margin, contribution margin per unit and contribution margin percentage.
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Cost Accounting, Student Value Edition Plus MyAccountingLab with Pearson eText -- Access Card Package (15th Edition)
- Describe how total variable costs and unit variable costs behave with changes in the level of activity.arrow_forwardDefine the term contribution margin ratio.arrow_forwardComputing contribution margin in total, per unit, and as a ratio Complete the table below for contribution margin per unit, total contribution margin, and contribution margin ratio:arrow_forward
- Describe the components of contribution margin.arrow_forwardPlease explain what is meant by the contribution margin. Also, please provide an example of how the contribution margin ratio is calculated and how the unit contribution margin is calculated.arrow_forwardInclude contribution Marginarrow_forward
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