Phi Kappa is planning to hold a seminar for students at the University Centre. It has two options:

OPTION 1: Fixed rental cost of $1,000 and $12 per person for books

or

OPTION 2: Fixed rental cost of $3,000 and $8 per person for books

Tickets will be $5 per student. Other items will be donated by recruiters wishing to network with students. Which option will cause the biggest loss if very few students attend?

Option 1

Option 2

Both options provide the same amount of risk

Neither option has risks

and

Using the contribution margin format income statement, which of the following will result from an increase of one unit sold?

Variable costs will increase in direct relation to the contribution margin ratio.

Variable costs will decrease in direct relation to the contribution margin ratio.

Every unit of product sold will decrease income by the contribution margin.

Every unit of product sold will increase income by the contribution margin.