1
Q
10,000 units, FC 300,000, VC 50/unit, sales price of 85/unit. VC will increase by 20% and units will increase to 12,000. What will happen to profits?
A
If production remains at 10,000 units, profits will decrease by $100,000
2
Q
Margin of Safety
A
Excess of sales over the breakeven sales
3
Q
Breakeven sales in dollars
A
Total fixed cost/ contribution margin ratio
4
Q
Contribution margin ratio
A
Contribution margin/sales
5
Q
Margin of safety percentage
A
Margin of safety in dollars/Sales
6
Q
Profit + cost =
A
sales
7
Q
Contribution Margin under Variable Costing
A
Sales (or SP) minus total variable costs (including variable overhead)
