Q20-10RQ - Horngren'S Financial And Managerial Accounting

Question

What are the three ways contribution margin can be ex

Step-by-Step Solution

Answer

Answer

 

1. Contribution per unit
2. Contribution margin ratio
3. Contribution margin income statement

 

Step 1: Contribution per unit

Unit contribution margin = Net sales revenue per unit − Variable costs per unit

Step 2: Contribution margin ratio

Contribution margin ratio = Unit Contribution margin / Net sales revenue per unit

Step 2: Contribution margin income statement

Traditional Income Statement	Contribution Margin Income Statement
Net Sales Revenue	Net Sales Revenue
Less: Cost of goods sold	Less: Variable costs
Gross Profit	Contribution margin
Less: Selling and administrative expenses	Less: Fixed costs
Operating Income	Operating income