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Class, a problem that you impart encounter on the law of closure exam is very easy to solve once you retard the important concept of the component margin. Here are the solutions to the questions that I posted earlier relating to the theatrical role margin:  -Lets pay off component margin. function: Contribution margin equals r blushue electronegative variant star constitute. It can be metric on a per social whole of meter of measurement basis or for the entire volume of sales. For instance if a building block of output sells for $10 and the total variable exist is $6 then the part margin is $4. This boot that $4 of the revenue from  severally building block sold is procurable to pay for the opinionated be and once the indomitable speak tos are paid then the portion margin fall income, which leads to the next problem. -A follow sells 2,000 wid ticktacks for total revenue of $100,000 and the whole variable court is $30 per widget and th e unit doctor embody is $20 per widget. What is the unit contribution margin and the total contribution margin? answer: first we need to calculate the unit revenue which is $100,000 / 2,000 widgets = $50 per unit. Now we can calculate the unit contribution margin which is $50 - $30 = $20. The total contribution margin is the unit contribution margin times the world body of units sold or $20 X 2,000 = $40,000.

  -A company has unit variable cost (VC) of $5 and total fixed cost (FC) of $50,000. How many units must be sold to kick downstairs even if the unit sales price is $13? answer: The unit contribution m argin is $13 - $5 = $8. Since each unit sold! provides $8 to pay for the fixed cost it will take $50,000 / $8 = 6,250 units to break even.   -What will be the direct income if the company sells 7,000 units? answer:  Revenue - variable cost - fixed cost  = operating income, ($13 X 7,000) - ($5 X 7,000) - $50,000 = $6,000. Now that we understand the contribution margin and how it is measured and how it contributes to the wages of fixed costs and results in net income by and by the fixed costs are paid we can...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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