Breakeven Point and Contribution Margin

Question 1

What is the formula for calculating contribution margin?

A Unit variable cost – unit revenue

B Unit revenue – unit variable cost

C Unit fixed cost – unit variable cost

D Unit revenue – unit fixed cost

Answer 1

B

Question 2

What is the formula for breakeven point?

A Fixed cost/contribution margin

B Variable cost/contribution margin

C Contribution margin/fixed cost

D Contribution margin/variable cost

Answer 2

A

Question 3

A company has total fixed cost of $10,000 and revenues per unit of $16. If the breakeven point is 4,000 units, what is the variable cost per unit?

A $2.50

B $9.00

C $12.25

D $13.50

Answer 3

D

Question 4

ABC Company sells shoes and desires to have a profit of $75,000. If the sale price per pair of shoes is $100, the variable cost per pair of shoes is $30, and the total fixed cost is $315,000, how many pairs of shoes must ABC company sell?

A 3,429 pairs

B 4,500 pairs

C 5,572 pairs

D 8,000 pairs

Answer 4

C

Question 5

If a company can produce multiple products on its production line, which product should it produce first?

A The product with the highest sale price

B The product that the company can produce the most of

C The product with the lowest cost per unit

D The produce with the highest contribution margin per unit of production

Answer 5

D