Continue to work as many exercises and problems as you can stand to do; it will pay off if performed in a faithful manner. The content of this preparation document does not necessarily cover all material that could be presented on the second mid-term. 1) In two companies making the same product and with the same total sales and total expenses, the contribution margin ratio will be lower in the company with a higher proportion of fixed expenses in its cost structure. 1) 2) The smaller the contribution margin ratio, the smaller the amount of sales required to cover a given amount of fixed expenses. 2) 3) For a given level of sales, a low contribution margin ratio will produce more net operating income than a high contribution margin ratio. 3) 4) The break-even point in units can be obtained by dividing total fixed expenses by the unit contribution margin. 4) 5) The break-even point can be determined by simply adding together all of the expenses from the income statement. 5) 6) The total volume in sales dollars that would be required to attain a given target profit is determined by dividing the target profit by the contribution margin ratio.