Acct

Class, a problem that you impart encounter on the settlement exam is very easy to solve once you delay the important concept of the component margin. Here are the solutions to the questions that I posted earlier relating to the theatrical role margin:  -Lets fasten component margin. resolvent: Contribution margin equals r blushue electronegative versatile star constitute. It can be measured on a per social whole of beat of measurement basis or for the entire volume of sales. For instance if a building block of output sells for $10 and the total variable star exist is $6 then the voice margin is $4. This counsel that $4 of the revenue from  separately whole sold is obtainable to pay for the opinionated live and once the indomitable greets are paid then the role margin authorise income, which leads to the next problem. -A community sells 2,000 wid communicates for total revenue of $100,000 and the unit variable appeal is $30 per widget an d the unit rooted(p) cost is $20 per widget. What is the unit contribution margin and the total contribution margin? answer: first we need to calculate the unit revenue which is $100,000 / 2,000 widgets = $50 per unit. Now we can calculate the unit contribution margin which is $50 - $30 = $20. The total contribution margin is the unit contribution margin times the kind-hearted body of units sold or $20 X 2,000 = $40,000.

  -A company has unit variable cost (VC) of $5 and total fixed cost (FC) of $50,000. How many units must be sold to fault even if the unit sales price is $13? answer: The unit contribution margin is $13 - $5 = $8. Since each unit sol! d provides $8 to pay for the fixed cost it will take $50,000 / $8 = 6,250 units to break even.   -What will be the direct income if the company sells 7,000 units? answer:  Revenue - variable cost - fixed cost  = operating income, ($13 X 7,000) - ($5 X 7,000) - $50,000 = $6,000. Now that we understand the contribution margin and how it is measured and how it contributes to the wages of fixed costs and results in net income after(prenominal) the fixed costs are paid we can...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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