smart book

Question 1

The sales price of a product is $100 per unit; the variable cost is $20 per unit; and fixed costs total $800. How many units must be sold to break even?

Answer 1

Reason: ($100N - $20N) - $800 = $0 N = $800 ÷ $80 = 10 units

Question 2

The point at which contribution margin equals total fixed cost is called the

Answer 2

break-even point

Question 3

If the contribution margin is $90,000 and sales are $100,000 what is the contribution margin ratio?

Answer 3

Contribution Margin Ratio = Contribution Margin/Sales $90,000/100,000 =.90

Question 4

If the sales price of a product is $10 per unit; the variable cost is $5 per unit; and fixed costs total $1,000, how many units must be sold to earn a profit of $1,000?

Answer 4

$400 Reason: Sales-Variables costs-Fixed costs=Profit $10N-$5N-$1,000=$1,000 $5N=$1,000+$1,000 N=$2,000/$5 N=400 units