In Contribution Margin Analysis,the Unit Price or Unit Cost Factor

question 65

Multiple Choice

In contribution margin analysis,the unit price or unit cost factor is computed as:

• A) the difference between the actual unit price or unit cost and the planned unit price or cost,multiplied by the planned quantity sold
• B) the difference between the actual unit price or unit cost and the planned unit price or cost,multiplied by the actual quantity sold
• C) the difference between the actual quantity sold and the planned quantity sold,multiplied by the planned unit sales price or unit cost
• D) the difference between the actual quantity sold and the planned quantity sold,multiplied by the actual unit sales price or unit cost

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Definitions:

Cost of Equity

The return that investors expect for providing capital to a company, often estimated using models like the Dividend Discount Model (DDM) or the Capital Asset Pricing Model (CAPM).

Unlevered Cost of Capital

Refers to the cost of capital for a firm that has no debt, representing only the cost of equity.

Financial Leverage

The use of borrowed money (debt) to amplify the potential return of an investment or project.

Debt/Equity Ratio

The indicator that compares the role of debt and equity in financing company assets.