Question

If we want to maximize profit, why do we use unit contribution margins in our analysis instead of unit gross margins?

   If we want to maximize profit, why do we use unit contribution margins in our analysis instead of unit gross margins?
 
Fundamentals of Cost Accounting
Fundamentals of Cost Accounting
William Lanen,… 4th Edition
Chapter 4, Problem 12 ↓

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The unit contribution margin is calculated by subtracting the variable costs per unit from the selling price per unit. Mathematically, it is expressed as: \[ \text{Unit Contribution Margin} = \text{Selling Price per Unit} - \text{Variable Costs per Unit} \] On the  Show more…

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If we want to maximize profit, why do we use unit contribution margins in our analysis instead of unit gross margins?
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