A product's contribution margin per unit is the excess value of the selling price per unit over the fixed cost of obtaining and selling each unit

1. A product's contribution margin per unit is the excess value of the selling price per unit over the fixed cost of obtaining and selling each unit.

f

2. The weighted average contribution margin will always be the same as the contribution margin of the highest-volume product.

f

3. Companies with high operating leverages generally have higher fixed costs than variable costs.

t

4. The margin of safety can be expressed in units, in sales dollars, or as a percentage.

t

5. Which of the following statements is TRUE if the sales price per unit increases while the variable cost per unit and total fixed costs remain constant?
   The contribution margin decreases and the breakeven point increases.
   The contribution margin increases and the breakeven point increases .
   The contribution margin decreases and the breakeven point decreases.
   The contribution margin increases and the breakeven point decreases.

d

6. Which of the following statements is TRUE if the variable cost per unit increases while the sale price per unit and total fixed costs remain constant?
   Breakeven point in units remains the same.
   Breakeven point in units increases.
   Contribution margin ratio increases.
   Breakeven point in units decreases.

b

7. The breakeven point may be defined as the number of units a company must sell to do which of the following?
   Generate a net loss
   Earn more net income than the previous accounting period
   Generate a net income
   Generate a zero profit

d

8. Akron Laser Wash sells deluxe car washes for $15 per customer. Variable costs are $9 per wash. Fixed costs are $40,000 per month. What is Akron Laser Wash's contribution margin ratio?
   250%
   60%
   40%
   6%

c

9. Branson Movies sells movie tickets for $13 per movie patron. Variable costs are $8 per movie patron and fixed costs are $60,000 per month. The company's relevant range extends to 35,000 movie patrons per month. What is Branson's projected operating income if 28,000 movie patrons see movies during a month?
   $304,000
   $80,000
   $364,000
   $140,000

b

10. Express Bus Company operates a bus route that takes passengers from Cleveland to Chicago every day. Assume the bus tickets sell for $50 per rider; the bus line's variable costs are $35 per rider; and its fixed costs are $75,000 each month. What is the contribution margin ratio?
    15%
    33%
    70%
    30%

d