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Contribution margin is computed as sales revenue minus variable expenses

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Related Questions

Contribution margin is equal to fixed costs minus variable costs?

No... The contribution margin is the dollar amount of each unit of output that is available first to cover fixed costs and then to contribute to profit.


What is an example of the contribution margin?

For example, if the per-unit variable cost is $15 and selling price per unit is $20, then the contribution margin is equal to $5. The contribution margin may provide a $5 contribution toward the reduction of fixed costs or a $5 contribution to profits.


What is the break even sales in units if a firm sells units at 40 each variable costs per unit are 10 and total fixed costs equal 120000?

To determine the break even sales in units, divide total fixed costs by the contribution margin per unit. Contribution margin per unit equals sales price less variable costs. Here, contribution margin per unit equals $30 each (i.e. $40 less $10). Total fixed costs equal $120,000. Therefore, the break even sales in units would equal $120,000 / $30 or 40,000 units.


Produce 60000 variable costs equal 50 percent fixed costs total 120000 what price stero sold to achieve EBIT of 95000?

Breakeven point = Fixed cost + EBIT / contribution margin ratio Contribution margin ratio = sales price - variable cost Contribution margin ratio = 1 - 0.5 = 0.5 or 50% Breakeven point = 215000 / .5 = 430000


How do you calculate transfer pricing?

The transfer price should be equal to the variable costs of the goods or services, plus the contribution margin per unit that is lost. =variable costs+(selling price-variable costs)


What is the break even in units if a firm sells 20000 units at 40 each variable costs per unit are 10 and total fixed costs equal 120000?

1. Breakeven point = fixed cost/ contribution margin ratio contribution margin ratio: (sales - variable cost)/sales Sales = 20000 * 40 = 800000 Less: Variable cost = 20000 * 10 = 200000 Contribution margin = 600000 Contribution margin ratio = 600000/800000 = .75 Breakeven point in dollars = 120000/.75 = $160000 breakeven point in units = 160000 / 40 = 4000


The margin of safety is equal to?

a. sales-net operation incomeb. sales-(variable expenses/contribution margin)c. sales-(fixed expenses/contribution margin ratio)d. sales-(variable expenses + fixed expenses)


What is the breakeven of a fixed cost equal 300000 the price per unit equals 10 and the variable cost per unit equals 7?

Fixed cost = 300000 Contribution margin ratio = (sales - variable cost) / sales Contribution margin ratio = (10 - 7 ) / 10 Contribution margin ratio = .3 breakeven point = 300000 / .3 = 1000000


When using data from a segmented income statement the dollar sales for the company to break even overall is equal to?

The dollar sales for a company to break even overall, using a segmented income statement, can be calculated by determining the total fixed costs of the company and dividing that by the contribution margin ratio. The contribution margin ratio is derived from the total sales minus variable costs, expressed as a percentage of total sales. Therefore, the break-even sales figure represents the level of sales needed to cover both fixed and variable costs without generating a profit or loss.


What effects the gross profit?

Gross profit or gross margin is equal to:Sales less: Costs of Goods Sold


What is margin of profit?

Gross profit or gross margin is equal to:Sales less: Costs of Goods SoldIt can be expressed as a numerical value or as a percentage of sales [(Sales-COS)/Sales].


How much will profits increase for every unit sold over the break-even point?

All units sold above the break even point will be a profit equal to the contribution margin.