Variable Cost: Variable cost are those cost which directly varies when the output of material changes. Variable cost same on per unit basis. When output increases it increases and when output decreases it decreases. Contribution margin: When we reduces per unit variable cost from the per unit sales price then we get per unit contribution margin and to calculate total contribution margin we multiply the units with per unit contribution. To calculate: Contribution Margin, Contribution margin ratio, and total contribution margin ratio.

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Chapter 5, Problem 4.2GAP

To determine

Concept introduction:

Variable Cost: Variable cost are those cost which directly varies when the output of material changes. Variable cost same on per unit basis. When output increases it increases and when output decreases it decreases.

Contribution margin: When we reduces per unit variable cost from the per unit sales price then we get per unit contribution margin and to calculate total contribution margin we multiply the units with per unit contribution.

To calculate:

Contribution Margin, Contribution margin ratio, and total contribution margin ratio.

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