18 Questions
What is the break-even point in units?
5,000 units
What is the break-even point in pesos?
P1,000,000
What is the unit contribution margin?
P80
What is the margin of safety in units?
3,000 units
What is the margin of safety in pesos?
P600,000
What is the margin of safety rate?
37.50%
What is the primary purpose of profit planning according to the text?
To anticipate profit under varying conditions
Which costing system is preferred for profit planning according to the text?
Variable costing
What is the relationship between contribution margin and fixed costs according to the text?
Contribution margin is used to cover fixed costs and generate profit
How does the variable costing system determine profit according to the text?
Profit = Contribution Margin - Fixed Costs
What is the relationship between sales volume and variable costs according to the text?
Variable costs change directly in relation to changes in sales volume
What is the margin of safety and how is it related to profit according to the text?
The text does not mention the margin of safety or its relation to profit
What does the Margin of Safety Ratio (MSR) indicate?
The proportion of margin of safety over budgeted sales
What is the relationship between profit and the margin of safety?
Profit is directly related to the amount of margin of safety
What does the breakeven point represent in relation to sales volume?
The point at which fixed and variable costs are covered by sales revenue
How is the unit contribution margin calculated?
(Selling price - Variable cost) / Number of units sold
What does the Margin of Safety indicate about a company's operations?
The amount above the break-even point that sales exceed
How is the Margin of Safety Ratio (MSR) calculated?
(Margin of Safety / Budgeted Sales) x 100
This quiz covers the tabulation and computation of margin of safety, margin of safety ratio, and its implications on profit. Learn how to calculate margin of safety in both units and pesos, and understand the significance of having a margin of safety in business.
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