# If the contribution margin is not sufficient to cover fixed expenses:

Questions 1-4

1. B) a loss occurs,

net income/(loss) = contribution margin - fixed expenses, So if contribution margin is sufficient to cover the fixed expenses then the org. have profit and if contribution margin is not sufficient to cover the fixed expesnes then a loss occurs.

2. D) Thre contribution margin ratio multiplied by the selling price per unit equals the contribution margin per unit,

contribution margin ratio = contribution margin/ sales, so if the contribution margin ration multiplied by sales price per unit, we get contribution margin per unit.

3. A) no chnage,

It can be explanied with the following example -

Suppose sales price per unit $100, variable cost per unit$50 then contribution margin per unit $50 and suppose fixed cost total$100,000 then break even point in units = $100,000/$50 = 2,000

and if increase sales price per unit and variable cost per unit with \$2 then there is no change in contribution margin per unit, so break even point in units is same 2,000 units.

4. B) the incremental costs associated with the order

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