Contribution Margin:
The amount of the contribution margin is the difference between the selling price of per unit and variable cost of per unit. Here contribution is the part of the sales revenue.
Operating Income:
The outcome of deduction of operating expense and
Variable Cost:
The Variable cost is that cost which varies with increase or decrease in the level of production. The Variable cost of per unit remains same. Here, it can be said that variable cost has the positive relationship with output of production.
Fixed Cost:
The Fixed cost is that cost which does not change with increase or decrease in the level of production, but per unit fixed changes with change in the level production. Examples of the fixed cost are rent, wages and insurance.
To determine: Action taken by N to maximize its operating income and factor that should be considered before making decision.
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Chapter 11 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
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