1. Faye Dunn defines contribution margin as the amount of profit available to cover operating expenses. Is there any truth in this definition? Discuss.
2. Marshall Company's GWhiz calculator sells for $40. Variable costs per unit are estimated to be $26. What are the contribution margin per unit and the contribution margin ratio?
3. "Break-even analysis is of limited use to management because a company cannot survive by just breaking even." Do you agree? Explain.