PART 2

Match the definitions with the most appropriate term from the list provided. Terms may be used once, more than once, or not at all. Description Terms Buffer zone that identifies how much sales can drop before the 1 business suffers a loss. An investment in technology that increases total fixed costs 2. while reducing the variable cost per unit. Total Fixed Costs +Target Profit 3 Contribution Margin Ratio How a company uses variable costs versus fixed costs to 4 |perform its operations. The proportion of units sold from each product or service line. When two profit equations yield the same profit. Actual or budgeted sales minus break-even sales. Total fixed costs plus target profit. Contribution Margin 5 6. 7 9- Net Operating Income Total Fixed Costs + Target Profit 10 Unit Contribution Margin Dublin Company and Gary Corp. have degrees of operating leverage of 4.5 and 2.7, respectively. Both companies have net income of $80,000. Required: 1. Without performing any calculations, which company is more vulnerable to fluctuations in sales level? Degree of Operating Leverage 2. Determine each company's total contribution margin. Total Contribution Margin Dublin Company Gary Corp