Calculate the Contribution Margin, If the Variable Cost Per Unit

question 30

Multiple Choice

Calculate the contribution margin, if the variable cost per unit to produce a microwave is $39 and a contribution rate is 45%.

• A) $17.55
• B) $1.15
• C) $70.91
• D) $31.91
• E) $39

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Definitions:

Collectibility

The likelihood or ability of an entity to collect on its accounts receivable or outstanding debts.

Account

A record in financial accounting that tracks the financial transactions of a specific asset, liability, equity, revenue, or expense.

Aging

A method used in accounting to categorize the amounts owed by customers based on the length of time an invoice has been outstanding.

Allowance for Doubtful Accounts

A contra-asset account that reduces accounts receivable to reflect the estimated amounts that are expected to be uncollectible.