Exam 7: Cost-Volume-Profit Analysis

Management at the Forrest Company currently sells its products for $225 per unit and is contemplating a 40% increase in the selling price for the next year.Variable costs are currently 25% of sales revenue and are not expected to change in dollar amount on a per unit basis next year (the company will still pay the same variable cost per unit).Fixed expenses are $120,750 per year. If fixed costs were to decrease 10% during the current year and the new selling price goes into effect,how many units will need to be sold to breakeven?

Randolph runs a lemonade stand and wants to make $150 in the next week.He sells each cup of lemonade for $0.75,while the variable cost is $0.15 for the cups and ingredients.Fixed costs such as posters and signs are $15.00. Calculate the following: a.Contribution margin per unit sold b.Contribution margin ratio c.Breakeven point in units d.Units to be sold to earn the targeted operating income

The Winner's Circle sells two products,medals and trophies.The Winner's Circle predicts that it will sell 25,000 medals and 5,000 trophies in the next period.The unit contribution margins for medals and trophies are $6.00 and $15.00,respectively.What is the weighted average unit contribution margin?

The operating leverage factor indicates the percentage change in operating income that will occur from a 5% change in volume.

Contessa Corporation has fixed expenses of $200,000,and a unit sales price of $70.Its variable cost per unit is $50.If it sells 8,500 posters,its operating income is a

The Suit Emporium carries brand name business attire.Each suit sells for the set price of $99.99.The variable cost per suit is $61.24 and the contribution margin is $38.75.The fixed expenses at Suit Emporium are $16,600.A new business apparel outlet has opened fifteen miles from the emporium's location and sales have decreased because local completion offers consumers similar products at lower price per unit.As a result of this decrease,the management at Suit Emporium is considering reducing the sales price per unit to attract the consumer base back to the emporium.The forecasted price per unit is $79.99. 1.What is the unit contribution margin using the forecasted sales price? 2.What is the new breakeven point in units?

If the selling price per unit is $42,the unit contribution margin is $15,and total fixed expenses are $570,000,what will the breakeven sales in units be?

Garfield Corporation is considering building a new plant in Canada.It predicts sales at the new plant to be 50,000 units at $5.00/unit.Below is a listing of estimated expenses: A Canadian 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. How much does the Canadian contractor expect to make in commissions?

Monroe Manufacturing produces and sells a product with a price of $100/unit.The following data has been prepared for its estimated upper and lower levels of activity. The fixed expenses for this company are

Corny and Sweet grows and sells sweet corn at its roadside produce stand.The selling price per dozen is $3.75,variable costs are $1.25 per dozen,and total fixed costs are $750.00.What are breakeven sales in dollars?

Bernard Corporation gathered the following information for the year just ended: During the year,Bernard produced and sold 50,000 units of product at a selling price of $9.00 per unit.There was no beginning inventory of product at the start of the year. What is the contribution margin for the year?

By multiplying the operating leverage factor by the anticipated percentage change in volume,one can find

A product is sold at $6 per unit,the unit contribution margin is $5,and total fixed expenses are $5,000,what are the breakeven sales in units?

If the selling price per unit is $25.00,the variable expense per unit is $6.25,and the breakeven sales in dollars is $465,200,what are total fixed expenses?

Given breakeven sales in units of 34,000 and a unit contribution margin of $5,how many units must be sold to reach a target operating income of $8,000?

The fixed expenses of Greg's Snowboards are $800,000.The selling price for one snowboard is $150.The variable cost per unit is $68.If the company sells 9,300 snowboards,its operating income is a

Garfield Corporation is considering building a new plant in Canada.It predicts sales at the new plant to be 50,000 units at $5.00/unit.Below is a listing of estimated expenses: A Canadian 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 unit variable cost for Garfield Corporation is

The margin of safety can be expressed in units,in sales dollars,or as a percentage.

If target sales in units is 80,000,total fixed expenses are $10,000,and the unit contribution margin is $0.30,what is the target operating income?

The contribution margin derived from different products is not used to motivate the sales force to increase sales of the most profitable products.