Exam 3: Cost-Volume-Profit Analysis

The controller at TellCo is examining her books. She determines that at the breakeven point of 5,000 units, variable costs total $4,000 and fixed costs total $7,000. Therefore, 5,001st unit sold will contribute ________ to profits. (Round the final answer to the nearest cent.)

Which of the following is an output measure for a hospital?

Contribution margin equals ________.

Answer the following questions using the information below: Patrick Ross has three booth rental options at the county fair where he plans to sell his new product. The booth rental options are: Option 1: $1,000 fixed fee, or Option 2: $750 fixed fee + 5% of all revenues generated at the fair, or Option 3: 20% of all revenues generated at the fair. The product sells for $37.50 per unit. He is able to purchase the units for $12.50 each. -How many actions and events will a decision table contain?

Dental Comfort Services provides dental cleanings to its patients. The selling price of a cleaning is $150 and the variable costs associated are $85. The monthly relevant fixed costs are $10,000. Required: a. What is the breakeven point in cleanings? b. What is the margin of safety in dollars, assuming sales total $30,000? c. What is the breakeven level in cleanings, assuming variable costs decrease by 20%? d. What is the breakeven level in dollars, assuming the selling price goes down by 10% and fixed costs increase $1,000 per month?

If Beta Corp's net income is $230,000 and the tax rate is 40%, then the company's planned operating income is ________.

In multiproduct situations, when sales mix shifts toward the product with the lowest contribution margin then ________.

Companies with a greater proportion of direct costs have a greater risk of loss than companies with a greater proportion of indirect costs.

Which of the following is true about the assumptions underlying basic CVP analysis?

The planned operating income is calculated by ________.

Black Pearl, Inc., sells a single product. The company's most recent income statement is given below. Required: a.Contribution margin ratio is________% b.Breakeven point in total sales dollars is$ ________ c.To achieve $40,000 in operating income, sales must total$ ________ d.If sales increase by $50,000, operating income will increase by$ ________ e.To achieve a $40,000 after tax income, given a tax rate of 20%, sales must total$________

The difference between total revenues and total variable costs is called contribution margin.

When there are multiple cost drivers the simple CVP formula of Q = (FC + OI)/CMU can still be used.

When a company has the least fixed costs, the company is operating at a very high operating leverage.

The selling price per unit less the variable cost per unit is the ________.

Quality Stores, Inc., sells several products. Information of average revenue and costs is as follows: What is the contribution margin percentage? (Round your answer to the nearest whole percent.)

Zirconia Fantasy sells only necklaces. 11,000 units were sold resulting in $270,000 of sales revenue, $80,000 of variable costs, and $40,000 of fixed costs. The breakeven point in total sales dollars is ________.

If a company increases fixed costs, then the breakeven point will be lower.

When fixed costs are $70,000 and variable costs are 60% of the selling price, then breakeven sales are ________. (Round the final answer to the nearest dollar.)

The Holiday Card Company, a producer of specialty cards, has asked you to complete several calculations based upon the following information: Required: a.What is the breakeven point in cards? b.What sales volume is needed to earn an after-tax net income of $13,028.40? c.How many cards must be sold to earn an after-tax net income of $18,480?