Your roommate asks your help on the following questions about CVP analysis formulas. (a) How can the

Question:

Your roommate asks your help on the following questions about CVP analysis formulas.

(a) How can the mathematical equation for break-even sales show both sales units and sales dollars?

(b) How do the formulas differ for contribution margin per unit and contribution margin ratio?

dollars?

Instructions

Write a memo to your roommate stating the relevant formulas and answering each question.

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...