Exam 3: Cost-Volume-Profit Analysis

Use the information below to answer the following question(s).Big Sports University is planning to hold a fund raising banquet at one of the local country clubs.It has two options for the banquet: 1.Foothills Country Club 2.Downhill Country Club Big Sports has budgeted $900 for administrative and marketing expenses.It plans to hire a band, which will cost another $400.Tickets are expected to be $40 per person.Any other items required for the event will be donated by its local business supporters. -How many people must purchase tickets assuming option two is chosen, and Big Sports expects to raise $4,820 for the athletic fund? Assume no one pays more than the cost of his/her ticket.

Capital intensive companies have less risk because their relatively lower operating leverage suggests that they have already made large investments in capital assets.

Janets's Custom Golf sells special clubs.Janet is able to purchase equipment from a manufacturing company for $90 each.The equipment is sold for $170 each.Required: a.What is the break-even in units assuming Janet incurred $4,500 in selling expenses, and there were no other expenses? b.What would be the break-even in units assuming Janet incurred $4,500 in selling expenses and had $9,000 in other fixed expenses?

Stephanie's Stuffed Animals reported the following: Required: a.Compute contribution margin. b.Compute gross margin. c.Compute operating income.

Operating income is equal to net income plus income taxes.

Use the information below to answer the following question(s).Brian O'Neil intends to sell his customers a special round-trip airline ticket package.He is able to purchase the package from the airline carrier for $400 each.The airline intends to reimburse Brian for any unsold ticket packages.The round-trip tickets will be sold for $500 each.Brian has a tax rate of 30% on his business income. -How many units will he need to sell in order to break-even assuming Brian incurred $10,000 in expenses to advertise the sale, and there are no other expenses?

Yurus Manufacturing Company produces two products, X and Y.The following information is presented for both products: Total fixed costs are $234,000.Required: a.Calculate the contribution margin for each product. b.Calculate break-even point in units of both X and Y if the sales mix is 3 units of X for every unit of Y. c.Calculate break-even volume in total dollars if the sales mix is 2 units of X for every 3 units of Y.

To perform cost-volume-profit analysis, a company must be able to separate costs into fixed and variable components.

How many units would have to be sold to yield a target operating income of $22,000, assuming variable costs are $15 per unit, total fixed costs are $2,000, and the unit selling price is $20?

Use the information below to answer the following question(s).Jill Bishop makes homemade soap.She sells it for $100 a case.Her variable costs are $40 per case.She has fixed costs of $600. -What is the contribution margin per case?

Use the information below to answer the following question(s).The following information is for Winnie Company: -What is the operating income assuming actual sales are 300,000 units, and the sales mix is one unit of Product A and two units of Product B?

Information Inc., sells accounting software.Each unit's cost may be separated as follows: selling price of $100 and variable costs of $30.Fixed costs are $10,000.What is Information Inc.'s operating income assuming 1,000 units are sold?

What is the break-even point in units, assuming a product's selling price is $100, fixed costs are $8,000, unit variable costs are $20, and operating income is $32,000?

To calculate the break-even point in a multi-product situation, one must assume that the sales mix of the various products remains constant.

A probability distribution describes the likelihood of each of the mutually exclusive and collectively exhaustive set of events.

When making net income evaluations, CVP calculations for target income must be stated in terms of target operating income instead of target net income.

Heady Company sells headbands to retailers for $5.The variable cost of goods sold per headband is $1, with a selling commission of 10 percent of sales.Fixed manufacturing costs total $25,000 per month, while fixed selling and administrative costs total $10,500.The income tax rate for Heady Company is 30 percent.Required: a.What is the break-even point in headbands? b.What are target sales in headbands to generate a before-tax income of $3,000? c.What are target sales in headbands to generate an after-tax income of $3,080? d.What is net income assuming Heady sells total 15,000 headbands?

Use the information below to answer the following question(s).Franscioso Company sells several products.Information of average revenue and costs is as follows: -The Franscioso Company break-even in sales dollars is

Use the information below to answer the following question(s).Bartwell Company sells several products.Information of average revenue and costs is as follows: -The Bartwell Company contribution margin ratio is

Use the information below to answer the following question(s).The following information is for Winnie Company: -What is the break-even point assuming the sales mix consists of two units of Product A and one unit of Product B?