A.
contribution margin income statement
Question 9

Contribution margin ratio is equal to ________.
A.
contribution margin divided by net sales revenue
Question 10
Young Company has provided the following information:
Calculate the contribution margin per unit.
A.
$28
Unit contribution margin = Net sales revenue per unit - Variable costs per unit
Question 11
Young Company has provided the following information:
What is the contribution margin ratio?
A.
70%
Contribution margin ratio = Contribution margin ÷ Net sales revenue<br><br><br><br>Contribution
margin ratio = ($28 ÷ $40) × 100 = 70%
Question 12
The Perfect Fit Company sells hand sewn shirts at $40 per shirt. It incurs monthly fixed costs of $5,000.
The contribution margin ratio is calculated to be 20%. What is the variable cost per shirt?
A.
$32 per shirt
Question 13
Pluto Hand blenders Company sold 2,000 units in October at a price of $35 per unit. The variable cost is
$20 per unit. The monthly fixed costs are $10,000. What is the operating income earned in October?
A.
$20,000
Question 14
Which of the following formulae is the right formula for calculating contribution margin ratio?
A.
Contribution margin ratio = Contribution margin ÷ Net sales revenue
Question 15

Maywood Company sells hand-knit scarves.. Each scarf sells for $25. The company pays $30 to rent a
vending space for one day. The variable costs are $15 per scarf. What total revenue amount does the
company need to earn to break even?
A.
$75
Required sales in dollars = (Fixed costs + Target profit) ÷ Contribution margin ratio<br>Contribution
margin ratio = Contribution margin ÷ Net sales revenue<br>Unit contribution margin = $25 - $15 = $10
per scarf<br>Contribution margin ratio = ($10 ÷ $25) × 100 = 40%<br><br>Required sales in dollars =
($30 + 0) ÷ 40% = $75
Question 16
Roberts Tobacco Company has fixed costs of $10,000. Their contribution margin ratio is 40% and ratio of
selling expenses to sales is 20%. What is the breakeven point in sales dollars?
A.
$25,000
Required sales in dollars = (Fixed costs + Target profit) ÷ Contribution margin ratio<br>Required sales in
dollars = ($10,000 + 0) ÷ 40% = $25,000
Question 17
Jupiter Company sells glass vases at a wholesale price of $2.50 per unit. The variable cost of manufacture
is $1.75 per unit. The monthly fixed costs are $7,500. Its current sales are 25,000 units per month. If the
company wants to increase its operating income by 20%, how many additional units, must it sell? (Round
intermediate calculations to two decimal places.)
A.
3,000 glass vases
Question 18
________ is a "what if" technique that estimates profit or loss results if selling price, costs, volume, or
underlying assumptions change.
A.
Sensitivity analysis
Question 19
When the total fixed costs increases, the contribution margin per unit ________.
A.
remains the same
Question 20
When the total fixed costs increases, the breakeven point ________.
A.
increases

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