Exam 3: Cost-Volume-Profit Analysis

Answer the following questions using the information below: The following information is for the Jeffries Corporation: Product A: Revenue $\quad \$ 16.00$ Variable Cost $\quad \$ 12.00$ Product B: Revenue $\quad \$ 24.00$ Variable Cost $\quad \$ 16.00$ Total fixed costs $\$ 75,000$ -What is the operating income of Jeffries Corporation,assuming actual sales total 25,000 units,and the sales mix is three units of Product A and one unit of Product B?

The risk-return tradeoff across alternative cost structures can be measured as operating leverage.

Fixed costs equal $15,000,unit contribution margin equals $25,and the number of units sold equal 1,150.Operating income is ________.

The contribution income statement highlights ________.

One of the first steps to take when using CVP analysis to help make decisions is ________.

If the sales mix shifts to four units of Product A and one unit of Product B,then the weighted-average contribution margin will ________.

Lights Manufacturing produces a single product that sells for $125.Variable costs per unit equal $50.The company expects total fixed costs to be $75,000 for the next month at the projected sales level of 1,000 units.What is the current breakeven point in terms of number of units?

Answer the following questions using the information below: Assume the following cost information for Fernandez Company: Selling price \ 120 per unit Variable costs \ 80 per urit Total fixed costs \ 80,000 Taxrate 40\% -What minimum volume of sales dollars is required to earn an after-tax net income of $30,000?

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

Query Company sells pillows for $25.00 each.The manufacturing cost,all variable,is $10 per pillow.The company is planning on renting an exhibition booth for both display and selling purposes at the annual crafts and art convention.The convention coordinator allows three options for each participating company.They are: 1.paying a fixed booth fee of $5,010,or 2.paying an $4,000 fee plus 10% of revenue made at the convention,or 3.paying 20% of revenue made at the convention. Required: a.Compute the breakeven sales in pillows of each option. b.Which option should Query Company choose,assuming sales are expected to be 800 pillows?

The contribution margin income statement ________.

Fine Suiting Company sells shirts for men and boys.The average selling price and variable cost for each product are as follows: Men's Boys Selling Price \ 25.00 Selling Price \ 24.00 Variable Cost \ 15.40 Variable Cost \ 16.00 $\text { Fixed costs are } \$ 35,200 \text {. }$ Required: a.What is the breakeven point in units for each type of shirt,assuming the sales mix is 1:1? b.What is the operating leverage,assuming the sales mix is 2:1 in favor of men's shirts,and sales total 5,000 shirts?

Pacific Company sells only one product for $11 per unit,variable production costs are $3 per unit,and selling and administrative costs are $1.50 per unit.Fixed costs for 10,000 units are $5,000.The operating income is ________.

Answer the following questions using the information below: Tally Corp. sells softwares during the recruiting seasons. During the current year, 11,000 softwares were sold resulting in $440,000 of sales revenue, $110,000 of variable costs, and $48,000 of fixed costs. -Contribution margin per software is ________.

Black Pearl,Inc.,sells a single product.The company's most recent income statement is given below. Sales \ 50,000 Less variable expenses (30,000) Contribution margin 20,000 Less fixed expenses (12,500) Net income \ 7,500 Required: a. Contribution margin ratio is \_\_\_\_\% b. Breakeven point in total sales dollars is \_\_ c. To achieve \ 40,000 in net income, sales must total \_\_ d. If sales increase by \ 50,000 , net income will increase by \_\_

To calculate the breakeven point in a multiproduct situation,one must assume that the sales mix of the various products remains constant.

The Marietta Company has fixed costs of $60,000 and variable costs are 75% of the selling price.To realize profits of $10,000 from sales of 50,000 units,the selling price per unit ________.

________ is the process of varying key estimates to identify those estimates that are the most critical to a decision.

If planned net income is $30,000 and the tax rate is 30%,then planned operating income would be $39,000.

When there are multiple cost drivers the simple CVP formula of Q = (FC + OI)/CMU can still be used.