1 mark) Choose the most correct interpretation for contribution margin ratio.

It is the percentage that the variable costs can increase before a loss occurs.

It is the percentage of sales that can be used to cover fixed costs and generate profits.

It is the percentage that the fixed cost can increase before a loss occurs.

It is the percentage that sales can decrease before a loss occurs.

j) (1 mark) Choose the most correct interpretation for margin of safety ratio.

It is the percentage that actual sales should increase to achieve the target profit.

It is the percentage that the actual sales can decrease before a loss occurs.

It is the percentage that the breakeven sales can decrease before a loss occurs.

It is the amount that sales can decrease before a loss occurs.

k) (1 mark) Choose the most correct interpretation for breakeven sales in unit.

The business can make a profit by selling one more unit than breakeven sales in units.

It is the minimum number of units to be sold to achieve target profit.

It is the number of units to be sold to make a profit.

It is the maximum number of units a business can sell given its fixed cost.