In Cost-Volume-Profit Analysis, the Unit Contribution Margin Is

question 25

Multiple Choice

In cost-volume-profit analysis, the unit contribution margin is:

• A) Sales price per unit less cost of goods sold per unit.
• B) Sales price per unit less unit fixed cost per unit.
• C) Sales price per unit less total variable cost per unit.
• D) Sales price per unit less unit total cost per unit.
• E) The same as the contribution margin ratio.

---

Definitions:

Diseconomies of Scale

A situation in which production costs increase as a firm’s output increases, leading to decreased efficiency.

Decreasing Returns to Scale

Decreasing Returns to Scale occurs when a firm increases all inputs by a certain proportion, but the output increases by a smaller proportion, indicating reduced efficiency.

Average Costs

The total cost of production divided by the number of units produced, often used to assess efficiency and profitability.

Decreasing Returns to Scale

A situation in which increasing the scale of production leads to a proportionally smaller increase in output, often due to inefficiencies.