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Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher
Edition 3ISBN: 0073527114Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher
Edition 3ISBN: 0073527114 Exercise 12
If we want to maximize profit, why do we use unit contribution margins in our analysis instead of unit gross margins?
Step-by-step solution
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Contribution margin:
It is the excess of sales revenue over the variable costs associated with the sales. It is calculated by deducting the total variable costs from the total revenues. The following is the formula to calculate the contribution margin:
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Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher
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