A product sells for Rs. 80 per unit and has a variable cost of Rs. 50 per unit. What is its contribution margin ratio?
Correct answer: B. 37.50 percent
- A. 30.00 percent
- B. 37.50 percent
- C. 50.00 percent
- D. 62.50 percent
Explanation
Contribution per unit is Rs. 30, calculated as Rs. 80 minus Rs. 50. The contribution margin ratio is Rs. 30 divided by Rs. 80, or 37.5 percent.
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Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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