Exam 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool

Suppose fixed costs increase. What will be the effect on the break-even point in units?

Assume the following information: Sales price per unit \ 100 Contribution margin ratio 50\% Total fixed costs \ 250,000 How many units must be sold to generate a before-tax profit of $45,000?

Better Bonds Better Bonds provided the following data: Sales \ 540,000 Variable costs \ 378,000 Fixed costs \ 120,000 Expected production and sales in units 40,000 -Refer to ePiano. What is the total contribution margin of six practice models, three deluxe models, and one professional model?

What formula calculates the margin of safety in dollars?

If variable costs decrease and the sales price increases, the break-even point decreases.

If the break-even point increases, the margin of safety increases.

How can a profit-volume graph be distinguished from a cost-volume-profits graph?

Suppose the contribution margin per unit decreases. What will be the effect on the break-even point in units?

Which term best describes fixed costs that can be directly traced to individual segments?

How is the sales mix expressed?

Which type of ratio reflects total variable cost divided by sales revenue?

Better Bonds Better Bonds provided the following data: Sales \ 540,000 Variable costs \ 378,000 Fixed costs \ 120,000 Expected production and sales in units 40,000 -Refer to Acme Company. What is the break-even point in units?

Roundstreet Company sells a product for $14. Variable costs are $7 per unit, and total fixed costs are $7,000. What is the break-even point in units?

The linear equation for revenue is sales price multiplied by fixed cost.

Even when you hold the sales mix constant, it is impossible to calculate the break-even point for individual products in a multiple product firm because many of the fixed costs are common to a number of products.

How can a multi-product firm determine its break-even point?

Match each following terms with their correct description from the items listed below. -A measure of the sensitivity of profit changes to changes in sales volume

Better Bonds Better Bonds provided the following data: Sales \ 540,000 Variable costs \ 378,000 Fixed costs \ 120,000 Expected production and sales in units 40,000 -Refer to ePiano. How many professional models are sold at break-even?

The HoltTec Company manufactures two products. Information about the two product lines for the year is as follows: Model Basic Deluxe Model Sales price per unit \ 70 \ 100 Variable costs per unit Contribution margin per unit The company expects fixed costs to be $192,000. The firm expects 60% of its sales (in units) to be Basic Model. Required: Calculate the break-even point in units for both Basic Model and Deluxe Model.

The contribution margin income statement provides a good check to determine if the sale of a certain number of units really results in operating income of the given amount.