In the linear breakeven model,the difference between selling price per unit and variable cost per unit is referred to as:
A) variable margin per unit
B) variable cost ratio
C) contribution margin per unit
D) target margin per unit
E) none of the above

Question

Quizplus · Accepted Answer

The difference between selling price per unit and variable cost per unit is known as contribution margin per unit. This is the amount of money that is left over after all variable costs are deducted from the selling price, and it is used to cover fixed costs and generate profits. Option A (variable margin per unit) is not a commonly used term. Option B (variable cost ratio) is the proportion of variable costs to sales, while Option D (target margin per unit) is the amount of money that a company must earn on each unit sold to achieve its desired profit level. Neither of these options describes the difference between selling price and variable cost per unit. Therefore, the correct answer is C.

In the Linear Breakeven Model,the Difference Between Selling Price Per