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

The quantity at which two systems produce the same operating income is referred to as the ___________________.

Managers can use CVP analysis to handle risk and uncertainty.

Contribution margin ratio can be calculated in all of the following ways except

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.

The ________________________ is the point where total revenue equals total cost.

Figure 4-7.A company provided the following data: -Refer to Figure 4-7. How many units must be sold to earn a profit of $40,000?

The formula used to calculate the number of units needed in order to earn a target income is

Figure 4-1.Foster Company makes power tools. The budgeted sales are $420,000, budgeted variable costs are $147,000, and budgeted fixed costs are $227,500. -Refer to Figure 4-1. What is the contribution margin?

The _________________________ depicts the relationships among cost, volume, and profits by plotting the total revenue line and the total cost line on a graph.

A company's mix of fixed costs relative to variable costs is referred to as its _______________.

Aaron Company provided the following data for next month: Required:

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 deluxe models sold at break-even?

To find the number of units to sell to earn a targeted income, it is acceptable to simply adjust the break-even units equation by adding target income to the variable cost.

Dirth Company sells only one product at a regular price of $7.50 per unit. Variable expenses are 60% of sales and fixed expenses are $30,000. Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales. What is the contribution margin ratio when the selling price is reduced to $6 per unit?

Figure 4-2.Pauley Company provides home health care. Pauley charges $35/hour for professional care. Variable costs are $21/hour and fixed costs are $78,000. Next year, Pauley expects to charge out 12,000 hours of home health care. -Refer to Figure 4-2. What is the contribution margin ratio?

___________________________________ is the income statement format that is based on the separation of costs into fixed and variable components.

The formula that can be used to calculate sales dollars necessary in order to earn a target income is

Figure 4-4.Yerke Company makes jungle gyms and tree houses for children. For jungle gyms, the price is $120 and variable expenses are $90 per unit. For tree houses, the price is $200 and variable expenses are $100. Total fixed expenses are $253,750. Last year, Yerke sold 12,000 gyms and 4,000 tree houses. -Refer to Figure 4-4. Now suppose that Yerke expects tree house demand to increase from 4,000 to 8,000 units. What is the number of tree houses sold at break-even?

If sales remain the same and the margin of safety increases, which of the following is true?

Which of the following equations is true?