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

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 budgeted operating income?

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

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. Using the lowest whole numbers, what is the sales mix of gyms and tree houses?

As a cost accountant at A&E Company you have been given a set of data and have been asked to perform a break-even analysis as well as a sensitivity analysis. Why are these analyses important?

The break-even point in sales dollars is equal to the break-even units multiplied by cost.

Sales can decline by how much before losses are incurred?

The margin of safety in dollars is

The relative combination of products (or services) being sold by an organization.

The amount of income an organization is trying to achieve during a particular period is known as the _____________.

Direct fixed expenses are the fixed costs that are not traceable to the segments and would remain even if one of the segments was eliminated.

Thomas Corporation developed the following income statement using a contribution margin approach: The projected income statement was based on sales of 100,000 units. Thomas has the capacity to produce 120,000 units during the year. Required:

Match each item with the correct statement below. -variable cost per unit

Information for Crisby Company is as follows: Required:

McCallen Company expects to produce and sell 500 units next month. Data on costs follows: Required:

The point where total sales revenue equals total cost.

If actual sales equal break-even sales

The income statement for Thomas Manufacturing Company for 2011 is as follows: What is the contribution margin per unit?

The units sold or expected to be sold or sales revenue earned or expected to be earned above the break-even volume.

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 cost per unit?

The profit-volume graph shows the relationship between profits and units sold.