Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Which of the following would produce the largest increase in the contribution margin per unit?

Increasing variable costs per unit while keeping the selling price constant

Increasing the selling price per unit while keeping variable costs constant

Decreasing the number of units sold

Decreasing total fixed costs

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Verified step by step guidance

Understand the concept of contribution margin per unit: Contribution margin per unit is calculated as the selling price per unit minus the variable cost per unit. It represents the amount available to cover fixed costs and contribute to profit.

Analyze the impact of increasing variable costs per unit while keeping the selling price constant: If variable costs increase, the contribution margin per unit will decrease because the difference between selling price and variable cost becomes smaller.

Evaluate the effect of increasing the selling price per unit while keeping variable costs constant: If the selling price increases, the contribution margin per unit will increase because the difference between selling price and variable cost becomes larger.

Consider the impact of decreasing the number of units sold: The number of units sold does not directly affect the contribution margin per unit, as it is calculated on a per-unit basis. However, it impacts total contribution margin and overall profitability.

Assess the effect of decreasing total fixed costs: Fixed costs do not influence the contribution margin per unit, as they are not part of the per-unit calculation. Fixed costs affect overall profitability but not the contribution margin per unit.