Question

unit contribution margin is best defined as the difference between the a. unit sales price and unit fixed costs. b. unit sales price and variable costs multiplied by the number of units sold. c. unit sales price and the unit variable costs divided by the sales price. d. unit sales price and the unit variable costs.

Answer 1

Correct option is D, unit contribution margin is best defined as the difference between the unit sales price and the unit variable costs.

A Unit Contribution Margin is what?

The amount by which a product's selling price exceeds its total variable cost is known as a unit contribution margin. The selling price of a product less the variable costs incurred to make it is, in other words, the unit contribution margin. The portion of a unit's selling price utilized to pay its fixed costs is measured as the unit contribution margin. Managers are interested in knowing how fixed costs are allocated to each unit produced since cost structures of organizations are crucial for production and planning.

The unit contribution margin computation is used in this situation. Because it is used to establish product contribution margin ratios and conduct break-even point analyses, unit contribution margin is crucial for managers to comprehend.

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