Exam 3: Cost-Volume-Profit Analysis

Answer the following questions using the information below: Northenscold Company sells several products. Information of average revenue and costs is as follows: -The number of units that Northenscold's must sell annually to make a profit of $144,000 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. -The contribution margin percentage is:

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. -How many ticket packages will Ruben need to sell to break even?

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 sales increase by $40,000, operating income will increase by:

Answer the following questions using the information below: Assume the following cost information for Fernandez Company: -What is the number of units that must be sold to earn an after-tax net income of $42,000?

A planned increase in advertising would be considered an increase in fixed costs in CVP analysis.

Ballpark Concessions currently sells hot dogs. During a typical month, the stand reports a profit of $9,000 with sales of $50,000, fixed costs of $21,000, and variable costs of $0.64 per hot dog. Next year, the company plans to start selling nachos for $3 per unit. Nachos will have a variable cost of $0.72 and new equipment and personnel to produce nachos will increase monthly fixed costs by $8,808. Initial sales of nachos should total 5,000 units. Most of the nacho sales are anticipated to come from current hot dog purchasers, therefore, monthly sales of hot dogs are expected to decline to $20,000. After the first year of nacho sales, the company president believes that hot dog sales will increase to $33,750 a month and nacho sales will increase to 7,500 units a month. Required: a. Determine the monthly breakeven sales in dollars before adding nachos. b. Determine the monthly breakeven sales during the first year of nachos sales, assuming a constant sales mix of 1 hotdog and 2 units of nachos.

Atlanta Radio Supply sells only two products, Product X and Product Y. Atlanta Radio Supply sells three units of Product X for each two units it sells of Product Y. Atlanta Radio Supply has a tax rate of 25%. Required: a. What is the breakeven point in units for each product, assuming the sales mix is 3 units of Product X for each two units of Product Y? b. How many units of each product would be sold if Atlanta Radio Supply desired an after-tax net income of $210,000, using its tax rate of 25%?

Answer the following questions using the information below: Sherry's Custom Jewelry sells a single product. 700 units were sold resulting in $7,000 of sales revenue, $2,800 of variable costs, and $1,200 of fixed costs. -If sales increase by $25,000, operating income will increase by:

A company with a low degree of operating leverage is at greater risk during downturns in the economy.

An increase in the tax rate will increase the breakeven point.

A profit-volume graph shows the impact on operating income from changes in the output level.

Answer the following questions using the information below: Dr. Charles Hunter, MD, performs a certain outpatient procedure for $1,000. His fixed costs are $20,000, while his variable costs are $500 per procedure. Dr. Hunter currently plans to perform 200 procedures this month. -What is the breakeven point for the month assuming that Dr. Hunter plans to perform the procedure 200 times?

If a company has a degree of operating leverage of 3.0 and sales increase by 25%, then:

Answer the following questions using the information below: The following information is for the Jeffries Corporation: -What is the operating income, assuming actual sales total 25,000 units, and the sales mix is three units of Product A and one unit of Product B?

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. -The contribution income statement highlights:

Answer the following questions using the information below: The following information is for Barnett Corporation: -What is the operating income, assuming actual sales total 150,000 units, and the sales mix is two units of Product X and one unit of Product Y?

When a company has at least some fixed costs, the degree of operating leverage is different at different levels of sales.

If the contribution margin ratio is 0.40, targeted operating income is $50,000, and fixed costs are $75,000, then sales volume in dollars is:

Helping Hands is a nonprofit organization that supplies electric fans during the summer for individuals in need. Fixed costs are $200,000. The fans cost $20.00 each. The organization has a budgeted appropriation of $480,000. How many people can receive a fan during the summer?