the formula for target units is: multiple choice (total fixed costs target profit)/contribution margin ratio (total variable costs total fixed costs)/contribution margin ratio (total fixed costs target profit)/unit contribution margin (total variable costs total fixed costs)/unit contribution margin

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KittehMeow4279 KittehMeow4279

10-12-2022
Business

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the formula for target units is: multiple choice (total fixed costs target profit)/contribution margin ratio (total variable costs total fixed costs)/contribution margin ratio (total fixed costs target profit)/unit contribution margin (total variable costs total fixed costs)/unit contribution margin

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akankshasharma92 akankshasharma92 · Answer 1 · 2022-12-18T08:42:08+01:00

The difference between a company's sales and variable costs, represented as a percentage, is the contribution margin ratio. The total income that can be used to cover fixed costs and turn

a profit is represented by an entity's total margin. The contribution margin ratio, when applied to a single unit sale, expresses the percentage of profit made on that particular sale. The contribution margin should be fairly substantial because it must be enough to pay for both fixed costs and overhead. The measure is helpful in deciding whether to permit a lower price in unique pricing circumstances. To continue selling a product at that price point would be foolish if the contribution margin ratio is abnormally low or negative.

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