Concept explainers
Concept introduction:
Cost Volume Profit (CVP) Analysis:
The Cost Volume Profit analysis is the analysis of the relation between cost, volume, and profit of a product. It analyzes the cost and profits at the different level of production, in order to determine the breakeven point and required the level of sales to earn the desired profit.
Contribution margin means the margin that is left with the company after recovering variable cost out of revenue earned by selling smart phones. The formula for contribution margin is as follows:
Contribution margin = Sales - Variable cost.
Similarly contribution margin ratio = Contribution/sales
To choose:
The option that indicates the calculation of Contribution Margin Ratio
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MANAGERIAL ACCOUNTING+CONNECTPLUS >IC<
- The amount of a units sales price that helps to cover fixed expenses is its ____________________. A. contribution margin B. profit C. variable cost D. stepped costarrow_forwardIn the cost equation Y=a+bx, Y represents which of the following? A. fixed costs B. variable costs C. total costs D. units of productionarrow_forwardFor which cost concept used in applying (he cost-plus, approach to product pricing are fixed manufacturing costs, fixed selling and administrative expenses, and desired profit allowed for in determining the markup? A. Total cost B. Product cost C. Variable cost D. Standard costarrow_forward
- Which of the following graphs illustrates how total fixed costs be have with changes in total units producedarrow_forwardThe use of fixed costs to extract higher percentage changes in profits as sales activity changes involves a. margin of safety. b. unit contribution margin. c. degree of operating leverage. d. sensitivity analysis. e. variable cost reduction.arrow_forwardTo calculate the sales dollars necessary to achieved a desired profit level, the sum of fixed costs plus desired prof it is divided by contribution margin weighted average unit contribution margin contribution margin ratio unit sales price minus unit contribution marginarrow_forward
- The contribution-margin ratio is: Select one: a. unit contribution margin divided by the selling price b. the difference between the selling price and the variable cost per unit. c. unit contribution margin divided by fixed cost per unit. d. variable cost per unit divided by the selling price e. fixed cost per unit divided by variable cost per unit.arrow_forwardOn the cost- volume -profit graph , the area between the total cost line and the sales line before the break -even point represents a. The profit area b. The variable cost amount c . The contribution margin per unit d. The fixed cost amount d. The loss areaarrow_forwardThe variable cost ratio represents The proportion of variable costs in relation to net income The proportion of variable costs in relation to contribution margin The proportion of variable costs in relation to sales The complementary proportion of fixed costs ratio in relation to sales Group of answer choices 1 2 3 4arrow_forward
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