Marginal costing

What is the formula for break even?

• Contribution/fixed costs

• Fixed costs/contribution per unit

• Sales price - fixed costs

• Sales price - variable costs

How do you calculate the number of unit to make a target profit?

• Contribution - fixed costs

• Sales - fixed costs

• Fixed costs + target profit/ Contribution per unit

• Sales - variable costs

Margin of safety is?

• The number of units sold above the break even point

• Sales - variable costs

• Fixed costs / contribution per unit

When a limiting factor is present we base the decision on which products to make based on the product that gives the highest contribution?

• True

• False

Marginal costing gives a higher profit than absorption costing if stock levels are reducing?

• True

• False

Sales price is £45 material is £12, labour is £8 and fixed production costs are £5 the contribution is?

• £33

• £20

• £25

Budgeted sales are 12,000 units and the break even is 7,500 units what is the margin of safety as a %.

• 62.5%

• 60%

• 37.5%