The Ratio of Fixed Expenses to the Unit Contribution Margin

question 117

Multiple Choice

The ratio of fixed expenses to the unit contribution margin is the:

• A)margin of safety.
• B)break-even point in unit sales.
• C)profit margin.
• D)contribution margin ratio.

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Definitions:

Treasury Stock

Shares that were once part of the outstanding shares and have been bought back by the issuing company, reducing the amount of outstanding stock on the open market.

Cash

Money or any instrument that banks will accept for deposit and immediate credit to a company’s account, such as a check, money order, or bank draft.

Common Stock Account

An equity account on a company's balance sheet representing the amount of money that has been invested directly in the company by its shareholders in exchange for common stock.

$5 Par Value

A nominal or face value assigned to a share of stock, in this case, set at five dollars, used in certain financial calculations and legal paperwork.