1.

The unit sales volume necessary to reach a target profit is determined by

dividing the target profit by the contribution margin per unit
2. The margin of safety tells a company how far sales can drop before it will be
operating at a loss
3. All other things the same, the margin of safety in pesos at a given level of
sales will tend to be lower for a capital-intensive company than for a labor-
intensive company with high variable expenses.

4. The margin of safety in pesos equals the excess of budgeted (or actual) sales
over the break-even volume of sales

5. Sales mix is a measure of the percentage increase in sales from period to

period
6. .The weighted-average contribution margin of all the products is computed
when determining the break-even sales for a multi-product firm.
7. A shift in the sales mix from products with high contribution margin ratios
toward products with low contribution margin ratios will raise the break-even
point
8. The break-even point in pesos is variable costs divided by the weighted
average contribution margin ratio.
9. When a company has limited resources, management must decide which
products to make and sell in order to maximize net income.
10. If a company has limited machine hours available for production, it is
generally more profitable to produce and sell the product with the highest
contribution margin per machine hour.