Using the contribution margin format income statement, which of the following will result from an increase...
Using the contribution margin format income statement, which of the following will result from an increase of one unit sold?
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Variable costs will increase in direct relation to the contribution margin ratio. |
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Variable costs will decrease in direct relation to the contribution margin ratio. |
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Every unit of product sold will decrease income by the contribution margin. |
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Every unit of product sold will increase income by the contribution margin. |
Homework Answers
Correct answer-----------Every unit of product sold will increase income by the contribution margin.
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The sales price per unit and variable cost per unit remains same so when an additional unit is sold the net addition to contribution margin will be contribution margin per unit. Since fixed cost in totality remains fixed the additional unit sale will increase profit by Contribution margin per unit.
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Using the contribution margin format income statement, which of
the following will result from an increase...
A contribution margin income statement organizes costs by behavior
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