BA213 Review for test # 2 Key
Contribution margin can be defined as:
the amount of sales revenue necessary to cover variable expenses.
sales revenue minus fixed expenses.
the amount of sales revenue necessary to cover fixed and variable expenses.
sales revenue minus variable expenses.
If both the fixed and variable expenses associated with a product decrease, what will be the effect on the
contribution margin ratio and the break-even point, respectively?
a. B. c. d.
The margin of safety can be calculated by:
Sales - (Fixed expenses/Contribution margin ratio).
Sales - (Fixed expenses/Variable expense per unit).
Sales - (Fixed expenses + Variable expenses).
Sales - Net operating income.