Exam 3: Cost-Volume-Profit Analysis

The Marietta Company has fixed costs of $75,000 and variable costs are 75% of the selling price. To realize operating income of $10,000 from sales of 80,000 units, the selling price per unit ________. (Round the answer to the nearest cent.)

Sparkle Jewelry sells 800 units resulting in $85,000 of sales revenue, $32,000 of variable costs, and $26,000 of fixed costs. The number of units that must be sold to achieve $41,000 of operating income is ________.

The contribution income statement highlights ________.

Lobster Liquidators will make $550,000 if the fishing season weather is good, $240,000 if the weather is fair, and would actually lose $40,000 if the weather is poor during the season. If the weather service gives a 45% probability of good weather, a 25% probability of fair weather, and a 30% probability of poor weather, what is the expected monetary value for Lobster Liquidators?

The degree of operating leverage at a specific level of sales helps the managers calculate the effect that potential changes in sales will have on operating income.

Family Furniture sells a table for $950. Its fixed costs are $2,500, while its variable costs are $500 per table. It currently plans to sell 180 tables this month. What is the budgeted operating income for the month assuming that Family Furniture sells 180 tables?

If the contribution margin ratio is 0.60, targeted operating income is $95,000, and targeted sales volume in dollars is $530,000, then the degree of operating leverage is ________.

Contribution margin percentage = Selling price - Variable cost per unit

Assuming a constant mix of 3 units of X for every 1 unit of Y. The breakeven point in units would be ________.

Globus Autos sells a single product. 8,000 units were sold resulting in $83,000 of sales revenue, $21,000 of variable costs, and $20,000 of fixed costs. If variable costs decrease by $1.00 per unit, the new margin of safety is ________. (Round intermediate calculations to the nearest cent.)

In the graph method of CVP analysis, ________.

Bell Company sells several products. Information of average revenue and costs is as follows: The company sells 13,000 units. What is the proportion of variable costs to total costs?

Gross margin is ________.

Craylon Manufacturing Company produces two products, X and Y. The following information is presented for both products: Total fixed costs are $275,000. Required: a.Calculate the contribution margin for each product. b.Calculate breakeven point in units of both X and Y if the sales mix is 3 units of X for every unit of Y. c.Calculate breakeven volume in total dollars if the sales mix is 2 units of X for every 3 units of Y.

Ruben is a travel agent. He intends to sell his customers a special round-trip airline ticket package. He is able to purchase the package from the airline for $160 each. The round-trip tickets will be sold for $200 each and the airline intends to reimburse Ruben for any unsold ticket packages. Fixed costs include $5,200 in advertising costs. How many ticket packages will Ruben need to sell to break even?

Katrina's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,200, variable costs are $400, and fixed costs are $110,000. What is Katrina's operating income when 200 dresses are sold?

Managers use cost-volume-profit (CVP) analysis to ________.

All else being equal, a reduction in selling price will ________.

If the breakeven point is 1,300 units and each unit sells for $50, then ________.

The following information is for the Jeffries Corporation: What is the operating income of Jeffries Corporation, assuming actual sales total 35,600 units, and the sales mix is three units of Product A and one unit of Product B?