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

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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.
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