Question

The percent by which a product's unit selling price exceeds its total unit variable cost is the: Multiple choice question. fixed cost per unit. contribution margin ratio. contribution margin per unit. margin of safety.

Answer 1

contribution margin ratio.

Step-by-step explanation:

A product can be defined as any physical object or material that typically satisfy and meets the demands, needs or wants of customers. Some examples of a product are mobile phones, television, microphone, microwave oven, bread, pencil, freezer, beverages, soft drinks, motorcycles, microwave oven, computer, radio, etc.

Contribution margin can be defined as the subtraction of variable cost from the sales price.

Simply stated, contribution margin is sales revenue of a product less variable costs and expense.

Mathematically, it given by the formula;

`Contribution \; margin = Sales \; price - Variable \; cost`

Variable cost refers to cost which are the same per unit of production but vary directly with level of output.

Hence, the contribution margin ratio percent by which a product's unit selling price exceeds (is greater than) its total unit variable cost.