The impact on a firm's income resulting from a change in the number of units sold can be assessed by multiplying the unit contribution margin by the change in units sold assuming that fixed costs remain the same.

Question

Quizplus · Accepted Answer

This statement is true. The formula to calculate the impact on income resulting from a change in the number of units sold is:

Change in income = Change in units sold x Unit contribution margin

Where the unit contribution margin is the difference between the unit selling price and the unit variable cost of producing the product. This formula assumes that fixed costs remain the same, which means that the contribution margin ratio remains constant.

The Impact on a Firm's Income Resulting from a Change