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 indicate:
The Calculation of Total Contribution margin, Contribution margin per unit, and Contribution margin ratio
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Managerial Accounting
- Please 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_forwardCan you help me answer the contribution margin per unit & contribution margin ratio please. Thank youarrow_forwardDescribe the components of contribution margin.arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College