Question

1. The difference between contribution margin and income from operations is___.

a. net income.
b. variable costs.
c. fixed costs.
d. one of these choices are correct.
2. A company's operating leverage is computed as:____.
a. contribution margin divided by income from operations.
b. profit margin divided by net income.
c. revenue divided by expenses.
d. none of these choices are correct.
3. The __________ is the relative distribution of sales among the products sold by a company.
a. sales mix.
b. mixed cost.
c. product mix.
d. none of these choices are correct.
4. The unit selling price of the overall enterprise product equals the____.
a. average selling price of the products.
b. price of the highest-selling product in the mix.
c. sum of the unit selling prices of each product multiplied by its sales mix percentage.
d. price of the product with the lowest selling price.

Answer 1

1. The difference between contribution margin and income from operations is fixed costs. income from operations = Contribution margin - Fixed expenses. So therefore, the difference between contribution margin and income from operations is known as fixed costs.

2. A company's operating leverage is computed as contribution margin divided by income from operations. Degree of Operating Leverage = Contribution Margin / Net Operating Income

3. The sales mix is the relative distribution of sales among the products sold by a company.

4. The unit selling price of the overall enterprise product equals the sum of the unit selling prices of each product multiplied by its sales mix percentage.