1. Short Answer Questions

1.In the context of a financial model, explain what a driver is and why they are important when you are analyzing and interpreting a financial model?

2. What is the difference between a variable and a fixed cost?How do you determine if a cost is variable or fixed?

3. Identify two of the four high-level strategies a company can use to increase its unit sales volume in order to improve net income (cash flow).

4. Why is understanding a product's contribution margin (in $, $ per unit and as a % of sales) important?