Exam 19: Cost-Volume-Profit Analysis

Peterson Company has both fixed and variable costs. If the volume doubles, the total fixed costs will double.

Bell Products manufactures packs of pesticides which are sold to farmers. Cost, volume and price data are as follows: Pice per unit \ 25.00 Variable cost per unit \ 20.00 Fixed cost per month \ 8,000 Current sales volume (units) 3,000 - If Bell wishes to double their current operating income, what volume of sales is needed?

Which of the following will lower the breakeven point assuming no other changes?

Arturo Company's model A generator sells for $456 and model B sells for $390. The variable cost of model A is $404 and of model B is $320. If Arturo Company's sales incentives reward sales of the goods with highest contribution margin, the sales force will be motivated to push sales of model A more aggressively than model B.

Taizhong Semiconductor Company mass produces several common computer chips. Type A sells for $1.20 per unit. Variable cost was $0.95 per unit and the fixed costs were $32,000 per month. Taizhong currently sells 140,000 units per month. Because of volatility in the precious metals market, the variable cost per unit has just gone up by $0.05, but the company does not believe it can pass the extra cost on to the customer. To offset higher variable costs, the production manager has developed a plan which will reduce fixed costs by 20%. How will these combined changes affect net operating income?

If production exceeds units sold, which of the following statements is CORRECT?

Taizhong Semiconductor Company mass produces several common computer chips. Type A sells for $1.20 per unit. Variable cost is $0.95 per unit and the fixed costs are $32,000 per month. Taizhong currently sells 140,000 units per month. Under intense pressure to boost profits, the production manager has a plan which will reduce fixed costs by 10%. How will this affect net operating income?

On a CVP graph, in the area where the revenue line appears below the total cost line, the vertical distance separating the two lines represents what?

For the next year, Hall Company predicts the sale of 15,000 units of a product with a contribution margin of $6 per unit and 30,000 units of another product with a contribution margin of $9 per unit. The weighted-average contribution margin per unit is $8.

Jarvis Foods produces a gourmet condiment which sells for $10.00 per unit. Variable costs are $7.50 per unit, and fixed costs are $18,000 per month. Jarvis is currently selling 8,000 units per month. How much is Jarvis's margin of safety expressed in sales revenue?

Breakeven is the point where the sales revenues are exactly equal to the fixed costs.

Moylan Company has provided the following contribution margin income statement: Sales \ 777,000 Variable expenses \ 504,000 Contribution margin \ 273,000 Fixed expenses \ 212,000 Operating incame \ 61,000 If the sales volume increases 10%, which of the following statements is CORRECT?

A company sells products in two size packages-regular and long. They sell twice as many regulars as they do the long size. The contribution margin of the regular is $12 and the contribution margin of the long size is $18. The weighted average contribution margin is $15.

Arquebus Company is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen and collectors. He is currently producing 40 flintlock muskets per month. Cost data are as follows: Price \ 720 per unit Variable cost \ 470 per unit Fixed costs \ 8,000 per month In June, the cost of the special kind of metal he uses went up considerably, and the variable cost per unit increased by $50 per unit. - If volume and other factors remain constant, how will this affect the company's breakeven point in sales dollars?

Ace Card Company has variable costs of $0.40 per unit of product. The remainder of its production costs are fixed. In May, the volume was 12,000 units and the total production costs were $6,900. How much are the fixed costs?

Runnymeade Products makes a racing bicycle tire. Cost and volume data are below. Pice per unit \ 18.00 Variable cost per urit \ 14.50 Fixed cost per manth \ 28,000 Current sales valume (urits) 10,000 - If management wants to earn $9,000 of operating income, how many units must be sold? (Please round to nearest whole number.)

Mist Company sells two products-A and B. Mist predicts that it will sell 2,500 units of A and 1,500 units of B during the next period. The unit contribution margins are $3.50 and $4.80, respectively. What is the weighted-average unit contribution margin? (Please round to nearest cent.)

Axelrod Company has fixed costs of $250,000. Highest production volume this year was in January when there were 100,000 units produced and total costs of $550,000. In June, the company produced only 60,000 units. How much was the total cost in June?

Bell Products manufactures packs of pesticides which are sold to farmers. Cost, volume and price data are as follows: Pice per unit \ 25.00 Variable cost per unit \ 20.00 Fixed cost per month \ 8,000 Current sales volume (units) 3,000 - If Bell wishes to increase their current operating income by 10%, what volume of sales is needed?

The local convenience store sells soft drinks. It sells two large drinks for every small drink. A large drink sells for $1.50, with a variable cost of $0.60. A small drink sells for $1.00, with a variable cost of $0.50. The weighted average contribution margin is $0.70.