All of the following statements are true except: The variable cost per unit is $
ID: 2576697 • Letter: A
Question
All of the following statements are true except:
The variable cost per unit is $9 and the selling price per unit is $12, therefore the contribution margin ratio is 75%.
The impact on net operating income of a given dollar change in sales can be calculated by applying the contribution margin ratio to the dollar change in sales.
The variable cost per unit is $10 and the selling price per unit is $50, therefore the contribution margin ratio is 80%.
The larger the contribution margin ratio, the smaller the amount of sales required to cover a given amount of fixed costs.
The variable cost per unit is $9 and the selling price per unit is $12, therefore the contribution margin ratio is 75%.
The impact on net operating income of a given dollar change in sales can be calculated by applying the contribution margin ratio to the dollar change in sales.
The variable cost per unit is $10 and the selling price per unit is $50, therefore the contribution margin ratio is 80%.
The larger the contribution margin ratio, the smaller the amount of sales required to cover a given amount of fixed costs.
Explanation / Answer
The variable cost per unit is $9 and the selling price per unit is $12, therefore the contribution margin ratio is 75% is FALSE Contribution margin will be 25%