1. An example of a variable cost for a service business is:
Labor rate (hourly or per service performed)
Materials used to perform services
Travel expenses to perform services
All of the above
2. Contribution margin = sale price per unit - variable costs per unit. It refers to the amount of money per unit that remains to cover the fixed costs and profit.
True
False
2. To calculate the breakeven point dollars, the contribution margin percentage is divided into fixed costs.
True
False
3. To calculate the breakeven point dollars, the contribution margin percentage is divided into fixed costs.
True
False
4. To calculate the amount of revenue and units needed to earn a specific profit, simply add the desired profit amount to the total variable costs.
True
False
5. Based on the following data:
a. Selling price: $17
b. Fixed Expenses:
Salaries: $130,000
Rent: $10,000
c. Variable Expenses:
Cost of goods/services sold: $4
Selling and admin: $3
What is the contribution margin?
$10
$13
$14