Exam 7: Cost-Volume-Profit Analysis

Gabe Industries sells two products, Basic models and Deluxe models. Basic models sell for $44 per unit with variable costs of $25 per unit. Deluxe models sell for $54 per unit with variable costs of $25 per unit. Total fixed costs for the company are $1441. Gabe Industries typically sells three Basic models for every Deluxe model. What is the breakeven point for Basic models and Deluxe models? (Round any intermediary calculations to the nearest cent and your final answers to the nearest whole unit.) A)38 units of Basic; 25 units of Deluxe B)25 units of Basic; 38 units of Deluxe C)50 units of Basic; 23 units of Deluxe D)23 units of Basic; 50 units of Deluxe

A breakeven mix is the combination of products that are available for sale.

The selling price of a particular product is $87.00 per unit, the variable expense is $43.00 per unit, and the breakeven sales in dollars is $261,000, what are total fixed expenses?

Richard's Framing Company provides the following information about its single product. How many units must be sold to earn the targeted operating income?

Barkley Company sells two products, red cups and black mugs. Barkley predicts that it will sell 2100 red cups and 600 black mugs in the next period. The unit contribution margins for red cups and black mugs are $2.70 and $3.60, respectively. What is the weighted average unit contribution margin?

I Scream For Ice Cream sells specialty ice cream in three flavors: Rocky Road, Peanut Butter, and Fruity Tooty. It sold 19,000 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 $50,400 and additional information follows: The sales mix percentage of Fruity Tooty based upon pounds is A)71%. B)40%. C)75%. D)20%.

Boss Enterprises currently sells its products for $40 per unit. Management is contemplating a 40% increase in the selling price for the next year. Variable costs are currently 40% of sales revenue and are not expected to change next year. Fixed expenses are $192,000 per year. What is the breakeven point in units at the current selling price?

A hotel would be an example of a company with high operating leverage.

If the selling price per unit is $75, the variable expense per unit is $70, and total fixed expenses are $62,500 what will the breakeven sales in units be?

The breakeven point is the sales level where operating income is positive.

If both fixed expenses and the selling price per unit increase while variable costs per unit are unchanged, which of the following statements is true?

CVP analysis assumes that the only factor that affects costs is a change in sale price.

Moe's Garage management has budgeted the following amounts for its next fiscal year: If Moe's can reduce fixed expenses by $5000, by how much can variable expenses per unit increase and still allow the company to maintain the original breakeven sales in units?

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.

Elk Manufacturing has budgeted the following amounts for its next fiscal year: To maintain the original breakeven sales in units if fixed expenses were to increase by 10%, the selling price per unit would have to be

The fixed expenses of Greg's Snowboards are $760,000. The selling price for one snowboard is $200. The variable cost per unit is $76. If the company sells 8900 snowboards, its operating income is a

Which of the following statements is true if the sales price per unit decreases while the variable cost per unit and total fixed costs remain constant?

Dairy Days Ice Cream sells ice cream cones for $5 per customer. Variable costs are $2 per cone. Fixed costs are $2900 per month. What is Dairy Days' contribution margin per ice cream cone?

The breakeven point can either be calculated in terms of number of units or in terms of sales revenue.

If total fixed costs are $179,000, the contribution margin per unit is $10.00, and targeted operating income is $22,000, how many units must be sold to breakeven?