Question: Explain why contribution margin per unit becomes profit per unit
Explain why contribution margin per unit becomes profit per unit above the break-even point.
Answer to relevant QuestionsSuppose a firm with a contribution margin ratio of 0.3 increased its advertising expenses by $10,000 and found that sales increased by $30,000. Was it a good decision to increase advertising expenses? Suppose that the ...Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Variable cost is 60 percent of the sales price; contribution margin is 40 percent of the sales price. Total fixed cost equals $49,500 ...Head-First Company had planned to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total ...Contribution Margin Ratio Silberg Company’s controller prepared the following budgeted income statement for the coming year: Sales ............... $415,000 Total variable cost .......... 282,200 Contribution margin ...Multiple Choice Questions 1. If the margin of safety is 0, then a. The company is precisely breaking even. b. The company is operating at a loss. c. The company is earning a small profit. d. The margin of safety cannot be ...
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