Multiple Choice
Which costing method(s) provide cost information that is helpful to management in setting prices?
28
views
4. Merchandising Operations
Net Sales
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
The amount by which a product's unit selling price exceeds its total unit variable cost is the:
A
Operating income per unit
B
Contribution margin per unit
C
Net sales per unit
D
Gross profit per unit
Verified step by step guidance1
Understand the concept of contribution margin per unit: It represents the amount by which the selling price of a product exceeds its variable costs per unit. This margin contributes to covering fixed costs and generating profit.
Identify the formula for contribution margin per unit: Contribution Margin per Unit = Selling Price per Unit - Variable Cost per Unit.
Analyze the given options: Operating income per unit refers to the profit after all costs (fixed and variable) are deducted, which is not the same as contribution margin. Net sales per unit refers to the revenue generated per unit sold, and gross profit per unit includes both fixed and variable costs, which is different from contribution margin.
Recognize that contribution margin per unit focuses solely on the relationship between selling price and variable costs, making it the correct answer in this context.
Apply the formula to any example or scenario to reinforce understanding: Subtract the variable cost per unit from the selling price per unit to calculate the contribution margin per unit.
9:04mWatch next
Master Net Sales:Sales Discounts (Gross Method) with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
