LO5. What are some other ways CVP analysis can be used? a) In your own words, define what is margin of safety? b) In your own words, define what is operating leverage? c) In your own words, define what is a sales mix? LO6. How does variable costing differ from absorption costing? e) is included in the per unit cost when using absorption costing, but not when using variable costing. f) Sales revenue - variable costs g) ABC Company had the following costs: Direct materials = $10 per unit Direct labor = $5 per unit Variable manufacturing overhead = $2 per unit Fixed manufacturing overhead = $1,000 Units produced is 1,000 units i) What is the cost per unit using the absorption method? ii) What is the cost per unit using the variable method? LO7. How does operating income differ between variable costing and absorption costing? a) ABC Company had the following costs: Direct materials = $10 per unit Direct labor - $5 per unit Variable manufacturing overhead - $2 per unit Fixed manufacturing overhead = $1.000 Variable selling and administrative - $3 per unit Fixed selling and administrative = $2,000 Selling price per unit - $100 Units produced and sold is 1,000 units i) Using the absorption costing method, the gross profit is: ii) Using the variable costing method, the contribution margin is