Exam 2

Question 1

= Contribution Margin

Answer 1

Sales - Variable Cost

Question 2

= Margin of safety (%)

Answer 2

Expected Sales - Break-even Sales
_____________________________
Expected Sales

Question 3

= Margin of safety ($)

Answer 3

Expected Sales - Break-even Sales

Question 4

= Break-even point ($)

Answer 4

Fixed costs / CM Ratio

Question 5

= Break-even point (units)

Answer 5

Fixed Costs / CM per unit

Question 6

Income Statement (Absorption Costing)

Answer 6

Sales
-COGS
______
Gross Profit
-Selling & administrative expenses
___________
Income

Question 7

Income Statement (Variable Costing)

Answer 7

Sales
-Variable COGS
-Variable selling & admin. expenses
____________
Contribution Margin
-Fixed overhead
-Fixed selling & admin. expenses
___________
Income