BUS170 Topic 2 Review Ans.pdf - Review questions Topic 2...

Review questions - Topic 2 - Answers
Fill-in-the-Blank Equations
1. Variable cost per unit = Change in total with changes in the activity level
2. Fixed cost = Total costs – (Variable cost per unit × Units produced)
3. Contribution margin = Sales – Variable costs
4. Contribution margin ratio = Contribution margin /sales
5. Change in income from operations = Change in sales dollars × Contribution margin ratio
6. Unit contribution margin = Sales price per unit – Variable cost per unit
7. Change in income from operations = Change in sales units × Unit contribution margin
8. Break-even sales (units) = Fixed costs/unit contribution margin
9. Break-even sales (dollars) = Fixed costs/ Contribution margin ratio
10. Sales (units) = ( Fixed costs + Target profit)/unit contribution margin
Determine if each of the following would be considered a fixed cost, variable cost, or mixed cost.
a. The company’s lawyer charges a base fee of $400 per month plus $20 for each hour of legal
service provided.