Exam 7: Cost-Volume-Profit Analysis

Martin Company currently sells its products for $190 per unit. Management is contemplating a 10% increase in the selling price for the next year. Variable costs are currently 20% of sales revenue and are not expected to change next year. Fixed expenses are $100,000 per year. If fixed costs increase 30% next year, and the new selling price per unit goes into effect, how many units will need to be sold to breakeven?

Helga's Pretzels sells pretzels for $8. The variable costs for each pretzel are $1, while the total fixed costs are $1000. The contribution margin for 1900 pretzels is

The contribution margin ratio is the unit contribution margin divided by the variable cost per unit.

Paint and Sip sells admission tickets for a painting class for $70 each. The cost of providing the canvas and supplies is $38 per ticket and the fixed cost of operating the art gallery is $55,000 per month. The company can accommodate 5900 patrons each month. What is the projected monthly income if 4400 patrons visit the theater each month?

Deen Enterprises currently sells its products for $1600 per unit. Management is contemplating a 20% increase in the selling price for the next year. Variable costs are currently 30% of sales revenue and are not expected to change next year. Fixed expenses are $280,800 per year. What is the breakeven point in units at the anticipated selling price per unit next year?

Geneva Bottled Water Co. is assembling a weighted average contribution margin chart to better analyze differences between sales on 36 oz. and the 20 oz. bottled water. The sales price per unit of the 36 oz. bottled water is $3.69 while the sales price per unit of the 20 oz. bottled water is $1.08. The contribution margin per unit for the 36 oz. bottle is $2.40 and the contribution margin of the 20 oz. bottle is $0.12. The 20 oz. bottle outsells the 36 oz. bottle by a 5:1 relationship. What is the weighted average contribution margin per unit on these two products?

________ should be subtracted from the sales price per unit to compute the unit contribution margin.

The following selected data relates to Green with Envy Corporation: Assuming 9400 units are sold, what is the contribution margin?

Garfield Corporation is considering building a new plant in Canada. It predicts sales at the new plant to be 70,000 units at $4.00/unit. Below is a listing of estimated expenses: A Canadian firm was contracted to sell the product and will receive a commission of 20% 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

Curvy Confections is considering building a new plant in Europe. It predicts sales at the new plant to be 40,000 units at $9.00/unit. Below is a listing of estimated expenses: A European firm was contracted to sell the product and will receive a commission of 15% of the sales price. No U.S. home office expenses will be allocated to the new facility. The unit variable cost for Curvy Confections is

Whenever the company makes changes to fixed costs, the breakeven point will never change.

If all other factors are constant, any decrease in fixed costs will decrease the breakeven point.

CVP stands for Company-Volume-Profit.

Jackie's Creamery sells fudge, caramels, and popcorn to consumers in the local community. The manager at the creamery sold 13,000 units last year. Popcorn outsold fudge by a ratio of 2 to 1. Sales of caramels equaled sales of popcorn. Total fixed costs for Jackie's Creamery are $13,000. The managerial accountant reported the following information: The sales mix percentage of caramel corn based upon units is

Gross margin is another term for net income.

UP Forklifts sells two products, large forklifts and small forklifts. A large forklift sells for $80,000 per unit with variable costs of $20,000 per unit. Small forklifts sell for $55,000 per unit with variable costs of $12,000 per unit. Total fixed costs for the company are $3,944,000. UP Forklifts typically sells one large forklift for every four smalls. What is the breakeven point in total units?

Only the income statement approach may be used to calculate the breakeven point.

To find a firm's operating leverage factor at a given level of sales, you

The selling price of a particular product is $7.00 per unit, the variable expense is $2.00 per unit, and the breakeven sales in dollars is $25,319, what are total fixed expenses?

Palmer's Gourmet Chocolates produces and sells assorted boxed chocolates. The unit selling price is $60, unit variable costs are $15, and total fixed costs are $3600. What are breakeven sales in dollars?