Abraham Company had revenues of $830,000 last year with total variable costs of $647,400 and fixed costs
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1. What is the variable cost ratio for Abraham? What is the contribution margin ratio?
2. What is the break-even point in sales revenue?
3. What was the margin of safety for Abraham last year?
4. Abraham is considering starting a multimedia advertising campaign that is supposed to increase sales by $12,000 per year. The campaign will cost $4,500. Is the advertising campaign a good idea? Explain. Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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Related Book For
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen
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