1 - Discussion Questions Dealing with a Variety of Issues; Gross Profit, Contribution Margin, Relevant Range, Break-Even Point, Relevant Costs & Sunk Costs, Master/Flexible Budgets, Return on Investment (ROI), and Ratio Analysis (30 total points, 6 points each) (Various Chapters): (Suggested time: 30 minutes) a. (Chap 1 & Intro) How would you explain to a peer at work the differences between gross profit/gross margin and contribution margin? b. (Chap 18) How does the concept of relevant range relate to, and impact, fixed costs? c. (Chap 18) What is the total contribution margin at a company's break-even point in units (BEPU)? d. (Chap 23) A prior student in this class was lamenting the $90,000 he spent on buying a new Jaguar for his wife that turned out to be a lemon (the car and not the spouse). As he analyzes his future options, is the $90,000 cost of the new Jaguar relevant or not to his decisions at hand? Please explain your answer. e. (Chap 20-21) In the budget process, you learned that we start with the master (overall) budget or forecast. What role does the flexible budget play in the budgeting process? Why should we have flexible budgets at all? Isn't the master (overall) budget enough? f. (Chap 22) Your non-MBA work colleague says to you one day at work, "I think that increases in our investment in inventories and accounts receivables are good for the business and should therefore cause an increase to our ROI". Assume these are the only changes for the company. Please explain to your colleague if this statement is correct or not and give reasons for your conclusions. g. (Chap 13) When using financial ratio analysis, why is it important to have access to more than one data point for each ratio