Write a memo to your roommate stating the relevant formulas and answering each question.

Your roommate asks your help on the following questions about CVP analysis formulas.

(a) How can the mathematical equation for break-even sales show both sales units and sales dollars?

(b) How do the formulas differ for contribution margin per unit and contribution margin ratio?

(c) How can contribution margin be used to determine break-even sales in units and in dollars?

Instructions

Write a memo to your roommate stating the relevant formulas and answering each question.