2.2.3 Contribution Flashcards
1
Q
What is contribution
A
The difference between the total revenue and the total variable costs
2
Q
What is contribution per unit
A
How much income is generated per item to paying of the fixed costs of the business
3
Q
Contribution per unit =
A
Price - variable costs per unit
4
Q
What does a high contribution per unit mean
A
The quicker the fixed costs will be payed and the more profit the firm will earn
5
Q
What is total contribution
A
The difference between a firms total revenue and its total variable costs
6
Q
Total contribution =
A
Total revenue - total costs
7
Q
Total contribution =
A
Contribution per unit x quantity sold
8
Q
Profit =
A
Total contribution - fixed costs
