10 Questions
What is the sales manager proposing to change regarding the sales staff's compensation?
From flat salaries to commission basis
According to CVP analysis assumptions, what is one of the factors that affect costs?
Changes in activity level
What does the Margin of Safety measure?
Cushion provided by a level of sales
If the sales manager's confident increase in annual sales by 15% is achieved, what will be the new annual sales amount?
$12,500
In the context of Margin of Safety, what does 'break-even point' refer to?
Point at which profit is zero
What formula is used to calculate the margin of safety ratio?
(Margin of Safety in dollars) / (Actual sales)
Which assumption of CVP analysis states that all units produced are sold?
All units produced are sold
If the Margin of Safety in dollars for a company is $300,000 and the Expected Sales are $900,000, what is the margin of safety ratio?
$1 : 3
How does the sales manager believe changing to a commission basis will impact annual sales?
Increase by 20%
'Margin of Safety' can be expressed as __________.
$250,000 cushion provided by sales
Learn about the equation method for calculating the break-even quantity in business. Understand how to determine the point where total sales equal variable costs plus fixed costs leading to zero operating income. Practice using the formula Profit = (P x Q) - (V x Q) - F.
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