If the selling price is $5000, the contribution margin per unit is $1000, then the contribution margin percentage will be _____________?
Correct answer: B. 20%
- A. 12%
- B. 20%
- C. 5%
- D. 15%
Explanation
Contribution margin percentage is contribution margin per unit divided by selling price: $1,000 ÷ $5,000 = 20%. This measures the portion of each sales dollar available to cover fixed costs and profit.
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About Cost Accounting
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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