Revision 29.07.21

How do you work out contribution?

• Sales - variable costs - fixed costs

• Sales - variable costs

• Sales - variable costs - overheads

• Sales - fixed costs

What is the formula for break-even in units?

• Fixed costs / contribution per unit

• Contribution / fixed costs

• Fixed costs + contribution per units

• Fixed costs - contribution per unit

What is the contribution sales ratio (c/s ratio) also known as?

• Sales-volume ratio (SV) ratio

• Contribution ratio

• Profit-volume ratio (PV) ratio

• Sales ratio

True or false:

the margin of safety is the difference between expected output and break-even output

• True

• False

What formulas are used to calculate the units or revenue required to achieve a target profit?

• (Fixed costs + target profit) / contribution per unit

• (Fixed costs x target profit) / contribution per unit

• (Fixed costs + target profit) / contribution per £ of sales

• (Fixed costs x target profit) / contribution per £ of sales

A milkman buys milk for £0.40 per bottle and sells it for £0.50 per bottle. This is the only product

that he sells, and the milk itself forms the only variable cost. The fixed costs of the business are

£150 per week

Calculate the break-even point in numbers of bottles of milk per week.

• 1600

• 150

• 1500

• 160

Sales 25,000

less cost of goods sold (15,000)

less fixed overheads ( 4,000)

Profit 6,000

The costs of goods sold are variable costs.

Calculate the Contribution / Sales (CS) ratio as a percentage

• 30%

• 35%

• 40%

• 45%

In which two of the following organisations are the owners liable for the total debts of the business?

• Samuel Copse Ltd

• Schofield and Partners (LLP)

• Lee Griffiths trading as Griffiths Decorating Services

• ABCD partnership

Which of the following are fundamental qualitative characteristics of accounting information

• Timeliness

• Relevance

• Faithful representation

• Reliability

What are the 4 supporting characteristics of financial information?

• Comparability, verifiability, timeliness, understandability

• Comparability, reliability, timeliness, understandability

• Comparability, verifiability, timeliness, relevance

• Complete, verifiability, timeliness, understandability