1. Differentiate between fixed and variable costs . 2. Explain the meaning and significance of the contribution margin 3. What is a PV ratio ? 4. Why should managers be interested in calculating the profit break -even point ? 5. Differentiate between the break -even point and the cash break -even point . Exercise 1: Identifying Fixed and variable Costs and calculating the Contribution Margin and the PV Ratio Answer all 6 questions ABC Tours is organizing a 5 day trip to Toronto . For this particular five -day trip , it will cost the ABC Tours the following : Bus and driver $ 1,500 /day Marketing $5,00 (brochure and newspapers ) Meals per person /day $5.00 (4 breakfasts ) $20.00 (5 dinners Hotel rooms (night ) $ 120.00 (4 nights ) Events /attractions $25.00 (per event for a total of 7 events ) Other fixed costs $1,000 Miscellaneous variable costs $100 (per person ) Price per client $1,700 Travel guide $500 /day Questions With the above information , calculate the following 1. Total fixed costs 2. Variable costs (per client) 3. Contribution margin (per client ) 4. PV ratio 5. The number of clients needed to break -even 6. The number of clients needed if Parkway wants to generate a $5,000 profit