Assume a Selling Price of $20 Per Unit, Variable Cost

question 10

Essay

Assume a selling price of $20 per unit, variable cost per unit of $12, and total fixed cost of $500.If 200 units are sold, calculate the contribution margin ratio.

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Definitions:

Perpetual Inventory

An inventory management system that continuously updates the quantity and value of inventory in real-time with every sale or purchase.

GAAP

Known as Generally Accepted Accounting Principles, these are the standard rules and guidelines followed in accounting for financial reporting.

IFRS

International Financial Reporting Standards, a set of global accounting guidelines that govern how company's financial statements are prepared.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made at specified periods rather than continuously.