1 If you were to describe one of the products at your curren

1) If you were to describe one of the products at your current or former place of work in a cost-volume-profit formula, what would that formula be, approximately? What would the contribution margin and contribution margin ratio be for that product? 100 words or more

Solution

The formula for cost-volume-profit formula can be Income = SP x Qty - Variable Cost x Qty - Fixed Cost

Contribution margin would be Sales - Variable Cost and Contribution margin ratio would be (sales - VC)/Sales

For example, let the product be iPhone whose Selling Price (SP) is $ 999, qty is 10 units, VC is $ 399 and FC is $ 200.

Thus, Income would be $999 x 10 - $ 399 x 10 - $ 200 = $ 4000. Where as contribution margin would be $ 6000 and CM ratio would be 60.06%