1.The contribution margin ratio measures:

a. Profit per unit

b. Contribution margin per dollar of sales.

c. Profit per dollar of sales.

d. The ratio of variable to fixed costs.

2.If a firm has relatively high operating leverage, it has

a. Relatively high variable costs.

b. Relatively high fixed costs.

c. Relatively low operating expenses.

d. Relatively high operating expenses.

3. In Shell Inc., the selling price per unit is $800 and the variable cost per unit is $500.Fixed costs are $1,000,000 per year. Assuming sales of $3,000,000, profit will be:

a. $125,000

b. $680,000

c. $750,000

d. None of the above.

4. In Shell Inc. the selling price per unit is $800 and the variable cost is $500. Fixed costs are $1,000,000 per year. In this case the BEP is approximately:

a. 3,333 units

b. 6,667 units

c. 5,500 units

d. None of the above

5.Consider the sales and variable cost information for the following 3 departments in September:

DrugsCosmeticsHousewares

Sales$80,000$40,000$30,000

Variable cost40,000 15,000 25,000

Contribution Margin$40,000$25,000$ 5,000

Based on the above information, estimate the increase in profit for a $10,000 increase in sales (assuming the sales mix remain the same)

a. $4,667

b. $5,667

c. $3,333

d. None of the above.