Exam 7: Cost-Volume-Profit Analysis

Grain Alternative Corporation has a predicted operating income of $80,000.The managerial accountant reported that total variable expenses are $25,000 and its total fixed expenses are $24,000.The company has a unit contribution margin of $20 on its sole product.Calculate the number of units needed to reach the operating income of $80,000.

Gray Company sells two products,X and Y.For the coming year,Gray predicts the sale of 10,000 units of X and 20,000 units of Y.The contribution margins of the two products are $4 and $6,respectively.The weighted average contribution margin per unit would be $5.00.

Stanley's Candies is considering building a new plant in Europe.It predicts sales at the new plant to be 40,000 units at $4.00/unit.Below is a listing of estimated expenses: A European firm was contracted to sell the product and will receive a commission of 10% of the sales price.No U.S.home office expenses will be allocated to the new facility. The margin of safety percentage for Stanley's Candies is

Martin Enterprises provides the following information about its single product. What is the contribution margin per unit?

Tom's Taxidermy has a monthly target operating income of $25,000.Variable expenses are 75% of sales and monthly fixed expenses are $15,000.What is Tom's operating leverage factor at the target level of operating income?

I Scream For Ice Cream sells specialty ice cream in three flavors: Rocky Road,Peanut Butter,and Fruity Tooty.It sold 15,000 gallons last year.For every five gallons of ice cream sold,one pound is Fruity Tooty and the remainder is split evenly between Peanut Butter and Rocky Road.Fixed costs for I Scream For Ice Cream are $27,000 and additional information follows: Breakeven sales in dollars for I Scream For Ice Cream is

Washington Bottling Company provides the following information about its single product. How many units must be sold to earn the targeted operating income?

To find the number of units that need to be sold to breakeven,the formula used could be

Scott Incorporated has been in business for several months.Because of increased competition in the region for part adapters,the managers at Scott Incorporated is considering cutting sales price from $32 per adapter to $28 per adapter. If the variable expenses remain at $21 per adapter and the fixed expenses remain at $6,500,how many adapters will the managers need to sell to break even? Compute the breakeven sales in units.

Mayfield Company sells two products,Blue models and Plaid models.Blue models sell for $45 per unit with variable costs of $30 per unit.Plaid models sell for $50 per unit with variable costs of $25 per unit.Total fixed costs for the company are $19,950.Mayfield Company typically sells two Blue models for every three Plaid models.What is the breakeven point in total units?

Tom's Taxidermy expects to sell 800 units of its specialty preservation product.The managerial accountant reported that manager must sell 400 units of specialty product to breakeven.Compute the margin of safety in units.

To the left of the breakeven point on a CVP graph,the area between the total expense line and the sales revenue line represents which of the following?

Grosheim Incorporated has fixed expenses of $212,500 per year.Right now,Grosheim Incorporated is selling its products for $125 per unit.Management is contemplating a 25% increase in the selling price for the next year.Variable costs are currently 40% of sales revenue and are not expected to change in dollar amount on a per unit basis next year (the company will pay the same amount for variable costs next year). If fixed costs increase 10% next year,and the new selling price per unit goes into effect,how many units will need to be sold to breakeven?

When calculating the breakeven point in terms of units,fixed costs should be divided by the contribution per unit.

The operating leverage factor will be exactly "1" only if a company has no fixed costs.

The area to the right of the breakeven point and between the total revenue line and the total expense line represents

The Settler's Chuck Wagon sells tickets for dinner and a show for $50 each.The cost of providing dinner is $23 per ticket and the fixed cost of operating the theater is $115,000 per month.The company can accommodate 13,500 patrons each month.What is the projected monthly income if 5,500 patrons visit the theater each month?

The selling price of a particular product is $85.00 per unit,the variable expense is $49.00 per unit,and the breakeven sales in dollars is $340,000,what are total fixed expenses?

The following selected data relates to Ivory Corporation: If sales revenue per unit increases to $27 and 8,500 units are sold,what is the contribution margin?

Fancy Furniture has variable expenses of 40% of sales and monthly fixed expenses of $240,000.The monthly target operating income is $60,000.What is the monthly margin of safety as a percentage of target sales in dollars?