Exam 7: Cost-Volume-Profit Analysis

Wallace Incorporated sells its products for $550 per unit. Variable costs are currently 20% of sales revenue. Fixed expenses are $198,000 per year. What is the breakeven point in units at the current selling price?

The Suit Emporium carries brand name business attire. Each suit sells for the set price of $99.99. The variable cost per suit is $59.71 and the contribution margin is $40.28. The fixed expenses at Suit Emporium are $16,300. A new business apparel outlet has opened fifteen miles from the emporium's location and sales have decreased because local competition 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 $89.99. 1. What is the unit contribution margin using the forecasted sales price? 2) What is the new breakeven point in units?

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

If the selling price per unit is $66, variable expenses per unit are $41, target operating income is $31,000, and total fixed expenses are $21,000, how many units must be sold to reach the target operating income?

Ruby Baker is the managerial accountant at the Seaside Motel. Ruby advised the Sales Manager that budgeted sales at the motel were 80 rooms, and the motel's breakeven point is 10 units. What is the margin of safety in units at the Seaside Motel?

Beasley Company currently sells its products for $30 per unit. Management is contemplating a 10% 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). Fixed expenses are $68,250 per year. What is the breakeven point in units at the anticipated selling price per unit next year?

Operating leverage refers to the relative amount of fixed and variable costs that make up total costs for a company.

The managerial accountant at Right Stripes T-Shirt Company reported the following information: The Right Stripes T-Shirt Company Contribution Margin Income Statement How many units did Right Stripes T-Shirt Company sell to achieve the above listed revenue? Compute the company's contribution margin.

Papa's Pastries sells regular donuts and large donuts. For every six regular donuts sold the manager at Papa's Pastries sell four large donuts. Calculate the weighted average contribution margin per unit.

The lowest possible operating leverage factor for a company is 1 and only occurs when

Companies with low operating leverage have relatively higher variable costs and lower fixed costs.

The difference between sales dollars and total costs after breakeven point on a CVP graph is the representation of

Antonio's Flowers sells bouquets for $75 each. The variable costs for each bouquet are $35. The total contribution margin for 45 bouquets is

If the variable cost per unit increases while the sale price per unit and total fixed costs remain constant, which of the following statements is true?

Assuming no other changes in the cost-volume-profit relationship, which of the following will decrease the breakeven point in units?

When ABC, Inc. changes the selling price per unit, it will not affect how many units they must sell to breakeven.

Fave Motion Pictures sells movie tickets for $14 per movie patron. Variable costs are $4.50 per movie patron and fixed costs are $52,000 per month. The company's relevant range extends to 33,000 movie patrons per month. What is Fave Motion Pictures' projected operating income if 20,000 movie patrons see movies during a month?

The following information for the past year for the Blaine Corporation has been provided: During the year, the company produced and sold 40,000 units of product at a selling price of $10.42 per unit. There was no beginning inventory of product at the beginning of the year. What is the contribution margin per unit for Blaine Corporation? (Round any intermediary calculations and your final answer to the nearest cent.)

When using the contribution margin ratio, managers project operating income based upon sales units.

The lowest possible operating leverage factor for a company is