Exam 3: Cost-Volume-Profit Analysis

Answer the following questions using the information below: Holly's Ham, Inc. sells hams during the major holiday seasons. During the current year 11,000 hams were sold resulting in $220,000 of sales revenue, $55,000 of variable costs, and $24,000 of fixed costs. -If selling price per unit is $30, variable costs per unit are $20, total fixed costs are $10,000, the tax rate is 30%, and the company sells 5,000 units, net income is:

Answer the following questions using the information below: Nancy's Niche sells a single product. 8,000 units were sold resulting in $80,000 of sales revenue, $20,000 of variable costs, and $10,000 of fixed costs. -If a change is made in one parameter of CVP analysis, it is an example of:

Cost-volume-profit analysis is used primarily by management:

When a greater proportion of costs are fixed costs, then:

Answer the following questions using the information below: Bush Manufacturing produces a single product that sells for $100. Variable costs per unit equal $25. The company expects total fixed costs to be $60,000 for the next month at the projected sales level of 1,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately. -What is the current breakeven point in terms of number of units?

A revenue driver is defined as:

Assume only the specified parameters change in a CVP analysis. The contribution margin percentage increases when:

Answer the following questions using the information below: Assume the following cost information for Fernandez Company: -To determine the effect of income tax on a decision, managers should evaluate:

Answer the following questions using the information below: Ruben intends to sell his customers a special round-trip airline ticket package. He is able to purchase the package from the airline carrier for $150 each. The round-trip tickets will be sold for $200 each and the airline intends to reimburse Ruben for any unsold ticket packages. Fixed costs include $5,000 in advertising costs. -What is the contribution margin per ticket package?

Answer the following questions using the information below: The following information is for Barnett Corporation: -What is the breakeven point assuming the sales mix consists of two units of Product X and one unit of Product Y?

The contribution income statement:

Answer the following questions using the information below: Franscioso Company sells several products. Information of average revenue and costs is as follows: -The number of units that Franscioso must sell each year to break even is:

Which of the following statements about net income (NI)is true?

"Uncertainty" may be defined as:

James Corporation gathered the following information: Required: a. Compute total fixed costs assuming a breakeven volume in dollars of $2,000,000. b. Compute sales volume in dollars to produce an after-tax net income of $150,000.

Suppose a company decided to automate a production line. Explain what effects this would have on a company's cost structure using CVP terminology. Could these changes have any possible negative effect on the firm?

If a company would like to increase its degree of operating leverage it should:

If a company's sales mix is 2 units of product A for every 3 units of product B, and the company sells 3,000 units in total of both products, only 2,000 units of product A will be sold.

In the graph method of CVP analysis, the breakeven point is the (X-axis)quantity of units sold for which the total revenues line crosses the total costs line.

Arthur's Plumbing reported the following: Required: a. Compute contribution margin. b. Compute contribution margin percentage. c. Compute gross margin. d. Compute gross margin percentage. e. Compute operating income.