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SolutiontoChapter7 E723,27,28P731,34,32,33,35 EXERCISE 723 (20 MINUTES) 1. Breakeven point (in units) 2. Contribution margin ratio 13,500 pizzas 3. .4Breakeven point (in sales dollars) 4. $135,000Let
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How to fill out contribution-margin ratio
01
Step 1: Gather the necessary financial information, including total sales revenue and total variable costs.
02
Step 2: Calculate the contribution margin by subtracting total variable costs from total sales revenue.
03
Step 3: Divide the contribution margin by the total sales revenue and multiply by 100 to get the contribution-margin ratio.
04
Step 4: Record the contribution-margin ratio for analysis and decision-making purposes.
Who needs contribution-margin ratio?
01
Business owners and managers who want to assess the profitability of their products or services.
02
Financial analysts who need to compare the performance of different business units or industries.
03
Investors and shareholders who want to evaluate the financial health and potential of a company.
04
Entrepreneurs and startup founders who are looking to understand the cost structure and break-even point of their business.
05
Management accountants who utilize contribution-margin ratio in budgeting, forecasting, and pricing decisions.
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What is contribution-margin ratio?
Contribution-margin ratio is a measure of a company's profitability and is calculated by dividing contribution margin by total sales revenue.
Who is required to file contribution-margin ratio?
Companies that want to analyze their profitability and make informed financial decisions are required to calculate and file contribution-margin ratio.
How to fill out contribution-margin ratio?
To fill out contribution-margin ratio, you need to calculate the contribution margin (sales revenue minus variable costs) and then divide it by total sales revenue.
What is the purpose of contribution-margin ratio?
The purpose of contribution-margin ratio is to help businesses determine how much revenue is available to cover fixed costs and generate profit.
What information must be reported on contribution-margin ratio?
Contribution-margin ratio requires reporting of total sales revenue, variable costs, and contribution margin.
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