Contribution Margin Per Unit Is Calculated by Subtracting Variable Costs

question 17

True/False

Contribution margin per unit is calculated by subtracting variable costs per unit and fixed costs per unit from the selling price per unit.

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Definitions:

Reconcile

is the process of ensuring that two sets of records (usually the balances of two accounts) are in agreement, often used in banking and accounting.

Variable Costing

An accounting method that only includes variable costs (costs that change with production levels) in product costs.

Absorption Costing

An accounting method that allocates all manufacturing costs, including both fixed and variable costs, to the product, used for external financial reporting and tax purposes.

Contribution Format

A type of income statement format that separates fixed costs from variable costs to highlight the contribution margin.