Exam 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool

Figure 4-3. Paney Company makes calendars.Information on cost per unit is as follows: Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000.The price per calendar is $10. Refer to Figure 4-3.What is the variable expense ratio?

Figure 4-3. Paney Company makes calendars.Information on cost per unit is as follows: Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000.The price per calendar is $10. Refer to Figure 4-3.What is the contribution margin per unit?

If variable expenses decrease and the price increases,the break-even point decreases.

Dance Unlimited plans to sell 10,000 ballet shoes at $50 each in the coming year.Unit variable cost is $30 and total fixed cost equals $65,000. Required: A.)Calculate the break-even in ballet shoes. B.)Calculate the break-even in sales dollars.

Figure 4-5. Standlar Company makes wireless speakers.The standard model price is $360 and variable expenses are $210.The deluxe model price is $500 and variable expenses are $300.The superior model price is $1,600 and variable expense per unit is $600.Total fixed expenses are $300,000.Generally,Standlar sells 8 standard models and 4 deluxe models for every superior model sold. Refer to Figure 4-5.What is the number of standard models sold at break-even?

The difference between sales and variable expenses is called the ______________________.

The profit-volume graph shows the relationship between operating income and the number of units sold.

The following data pertain to the three products produced by Alberts Corporation: Fixed costs are $90,000 per month. Sixty percent of all units sold are Product A,30 percent are Product B,and 10 percent are Product C What is the monthly break-even point for total units?

It is possible to calculate the break-even point for individual products in a multiple product firm by separating the common and direct fixed expenses.

If one increases variable costs per unit,the break-even point will decrease.

____ can be measured for a given level of sales by taking the ratio of contribution margin to operating income.

The ratio of fixed expenses to the contribution margin ratio is the

Newman Company expects to produce and sell 2,000 units next month.Data on costs follows: Required:

In a multi-product firm,if the sales mix changes,the break-even points for each product will not change.

In order for the break-even computation to be meaningful to management,sales mix should be computed using the

The cost-volume-profit graph

Total variable cost divided by price is

Fixed expenses that cannot be directly traced to individual segments are called

______________ gives us a way to determine how many units must be sold,or how much sales revenue must be generated to earn a particular target income.

Shamrock Inc.plans to sell 3,000 Irish sweaters for $200 each in the coming year.Product costs include: Variable selling expenses are $5 per sweater and fixed selling and administrative expenses total $12,000. Required: A.)Calculate the total variable cost per unit. B.)Calculate the total fixed expenses for the year. C.)Prepare a contribution margin income statement for Shamrock Inc.for the coming year.