FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 3: Analysis of Cost,Volume,and Pricing to Increase Profitability

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

Jasper Company has variable costs per unit of $20,fixed costs of $300,000,and a break-even point of 60,000 units.What will be the new break-even point in units if variable costs decrease by $3 per unit and fixed costs increase by $100,000?

A) 93,333 units
B) 33,333 units
C) 50,000 units
D) 200,000 units

E) A) and B)
F) B) and C)

Correct Answer

verified

Show Answer

Question 62

Multiple Choice

Review LaterAdd Note

Review Later

What is the formula for calculating contribution margin ratio?

A) Contribution margin ÷ Net income
B) Contribution margin ÷ Fixed costs
C) Contribution margin ÷ Desired profit
D) Contribution margin ÷ Sales

E) B) and D)
F) A) and D)

Correct Answer

verified

Show Answer

Question 63

Multiple Choice

Review LaterAdd Note

Rose Corporation sells backpacks.Variable costs for this product are $30 per unit,and the sales price per unit is $50 per unit.Total fixed costs amount to $100,000.How many backpacks does Rose need to sell to achieve a desired profit of $60,000?

Consider the following cost-volume-profit graph: What is the approximate amount of fixed costs in this organization?

What happens to the break-even point in sales dollars when the contribution margin ratio increases?

To find the break-even point for a company that sells several products,the analyst must make an assumption about what the sales mix will be and calculate a weighted average contribution margin based on that sales mix.

Contribution margin cannot be calculated for a service-type business,and cost-volume-profit analysis is not applicable for a company that provides services rather than selling goods.

How can contribution margin per unit be used to find the break-even point in units?

Explain how to calculate contribution margin per unit.

During the current year,Fairview Corporation sold 100,000 units of its product for $20 each.The variable cost per unit was $14,and Fairview's margin of safety was 40,000 units.What was the amount of Fairview's total fixed costs?

The following information is for a product manufactured and sold by Richards Corporation: Sales price per unit,$70 Variable cost per unit,$40 Total fixed costs,$600,000 Last year,Richards earned a profit of $30,000. Required: 1)How many units did Richards sell last year? 2)Richards' managers are considering decreasing the sales price to $60 in an effort to increase market share.Also,the company wants a profit of $60,000.How many units would it have to sell at the lower selling price to achieve this target?

Which of the following is not an assumption made when performing cost-volume-profit analysis?

The following information is for a product manufactured and sold by Drake Company: Sales price per unit: $100 Variable cost per unit: $30 Total annual fixed costs: $350,000 Required: 1)Calculate the contribution margin per unit. 2)How many units must Crane sell to break-even? 3)How many units must Crane sell to achieve a profit of $35,000?

Contribution margin ratio will remain the same at various levels of sales even if total fixed costs are altered.

At the break-even point:

Chesterfield Corporation has been operating well above its break-even point.What will happen to Chesterfield's margin of safety if the variable cost per unit increases?

When performing sensitivity analysis,which of the following is an example of a variable that management may consider changing to answer "what if" questions?

Lex Company produces products that it sells for $10 each.Variable costs per unit are $4,and annual fixed costs are $120,000. Required: Use the equation method to determine the break-even point in units and dollars.

Goff Corporation sells products for $75 each that have variable costs of $50 per unit.Goff's fixed cost is $350,000. Required: Calculate the contribution margin per unit,then use the per unit contribution margin approach to find the break-even point in units and dollars.

Preston Company sells a product whose contribution margin ratio is 20%.Assuming fixed costs don't change,incremental sales of $50,000 will generate $20,000 of additional profit.