How many statements below regarding margin of safety are correct? 1. It is the amount by which sales can be reduced without incurring a loss. 2. It is the difference between budgeted sales and breakeven sales. 3. It can be expressed in terms of unit, pesos or percentage of sales. 4. Its presence indicates that the company expects profit. 5. The product of margin of safety units and unit contribution margin is the projected profit for the period. 6. The higher the margin of safety, the lower is the risk of incurring operating loss.

Change in operating income = change in sales dollars x contribution margin What is the equation for the "change in sales dollars"?

The contribution margin equals sales minus all O period O variable O fixed O product expenses.

If an organization wants to make a profit, it must generate more sales revenue than the total costs it incurs. This relation can be expressed using which of the following profit equations? O a. Operating income = [(Sales price per unit - Variable cost per unit) x #units sold] - Fixed cost O b. Operating income = [Sales price per unit - Fixed cost per unit) x # units produced] -Variable cost Oc Operating income Sales revenue - Total variable costs - Discretionary costs O d. Operating income - Sales revenue - Committed costs - Fixed costs

At break even point: a) sales - contribution margin = net income or net loss b) sales - fixed expenses = variable expenses c) sales + variable expenses = contribution margin d) contribution margin + fixed expenses = net income

When the sales price per unit decreases, the contribution margin per unit A. decreases B. increases OC. increases proportionately OD. remains the same 13