when you have a limited resource (such as machine hours) and you have to choose which product to make, should you choose the one that has the higher or lower contribution margin per unit?

choose the one that has the HIGHER contribution margin per unit More test answers on https://studyhippo.com/chapter-6-managerial-accounting-test-2-56926/

When a company has a production constraint, total contribution margin will be maximized by emphasizing the products with the lowest contribution margin per unit of the constrained resource.

False More test answers on https://studyhippo.com/accounting-test-2/

Operating Income formula using contribution margin per unit

[Contribution margin per unit x #of units sold] – Fixed Expenses More test answers on https://studyhippo.com/managerial-accounting-chapter-2-3-contribution-margin-analysis-56962/

Contribution Margin & Contribution margin per unit formulas

Contribution margin = Sales revenue – Total variable expenses Contribution margin per unit = sales price per unit – Variable cost per unit More test answers on https://studyhippo.com/managerial-accounting-chapter-2-3-contribution-margin-analysis-56962/

Formula for contribution margin per unit

Unit selling price- Unit variable costs More test answers on https://studyhippo.com/cost-volume-profit-analysis-ch-18/

highest contribution margin per unit of scarce resources

when production facilities are limited, the company should produce the mix that will not exceed demand and maximize the production of the product with the: More test answers on https://studyhippo.com/acct-212-hw-7-ch-10/

Which of the following is true regarding the contribution margin ratio of a single product company? – As fixed expenses decrease, the contribution margin ratio increases. – The contribution margin ratio multiplied by the variable expense per unit equals the contribution margin per unit. – If sales increase, the dollar increase in net operating income can be computed by multiplying the contribution margin ratio by the dollar increase in sales. – The contribution margin ratio increases as the number of units sold increases.

If sales increase, the dollar increase in net operating income can be computed by multiplying the contribution margin ratio by the dollar increase in sales. More test answers on https://studyhippo.com/acctg-test-2/

Other variable costs per unit subtracted from Total COGS per unit equals ________. A) Total other variable costs per unit B) Contribution margin per unit C) Cost of goods sold per unit D) Operating profit per unit

B More test answers on https://studyhippo.com/mgt-3111-ch-12/

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Contribution Margin Per Unit Flashcards, test questions and answers

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What is Contribution Margin Per Unit?

Contribution margin per unit is a key metric used in break-even analysis to understand the amount of money left over from each sale after accounting for all variable costs associated with producing and selling the product. It helps companies measure profitability on an item-by-item basis and can be used to assess pricing decisions, make projections about sales volume, and more accurately calculate break-even points. The contribution margin per unit is calculated by subtracting total variable costs (such as cost of goods sold) from the unit selling price. For example, if a company sells a product for $10 and has $3 in variable costs associated with that product, then its contribution margin per unit would be $7 ($10 – $3). This number represents the revenue available to cover fixed costs like rent or salaries before turning any profit. By understanding how much money it makes on each individual sale, businesses are better able to determine when their products will become profitable and adjust prices accordingly. Companies can also compare different products within their portfolio based on their respective contribution margins, allowing them to focus resources where they will generate maximum returns. Finally, knowledge of contribution margins allows firms to set realistic goals for sales volumes required to reach desired levels of profitability. In conclusion, contribution margin per unit is a valuable tool that provides insight into how much revenue remains after accounting for all direct expenses related to production and sales. The figure gives businesses greater clarity around pricing strategies while helping them identify ways they can maximize profits through adjustments in production volume or other cost optimization techniques.