Skip to ContentGo to accessibility page
OpenStax Logo
Principles of Accounting, Volume 2: Managerial Accounting

Questions

Principles of Accounting, Volume 2: Managerial AccountingQuestions

Questions

1.

LO 3.1Define and explain contribution margin on a per unit basis.

2.

LO 3.1Define and explain contribution margin ratio.

3.

LO 3.1Explain how a contribution margin income statement can be used to determine profitability.

4.

LO 3.2In a cost-volume-profit analysis, explain what happens at the break-even point and why companies do not want to remain at the break-even point.

5.

LO 3.2What is meant by a product’s contribution margin ratio and how is this ratio useful in planning business operations?

6.

LO 3.3Explain how a manager can use CVP analysis to make decisions regarding changes in operations or pricing structure.

7.

LO 3.3After conducting a CVP analysis, most businesses will then recreate a revised or projected income statement incorporating the results of the CVP analysis. What is the benefit of taking this extra step in the analysis?

8.

LO 3.3Explain how it is possible for costs to change without changing the break-even point.

9.

LO 3.4Explain what a sales mix is and how changes in the sales mix affect the break-even point.

10.

LO 3.4Explain how break-even analysis for a multi-product company differs from a company selling a single product.

11.

LO 3.5Explain margin of safety and why it is an important measurement for managers.

12.

LO 3.5Define operating leverage and explain its importance to a company and how it relates to risk.

PreviousNext
Order a print copy
Citation/Attribution

This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's permission.

Want to cite, share, or modify this book? This book uses the Creative Commons Attribution-NonCommercial-ShareAlike License and you must attribute OpenStax.

Attribution information
  • If you are redistributing all or part of this book in a print format, then you must include on every physical page the following attribution:

    Access for free at https://openstax.org/books/principles-managerial-accounting/pages/1-why-it-matters

  • If you are redistributing all or part of this book in a digital format, then you must include on every digital page view the following attribution:

    Access for free at https://openstax.org/books/principles-managerial-accounting/pages/1-why-it-matters

Citation information

© Apr 23, 2026 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.