Exam 7: Cost-Volume-Profit Analysis

Noel & Vang Company sells only one product at a regular price of $9.00 per unit.Variable expenses are 55% of sales, and fixed expenses are $40,000.Management has decided to decrease the selling price to $8.00 in the hope of increasing its volume of sales.What is the contribution margin ratio when the selling price is reduced to $8.00 per unit? (Note: Round answer to two decimal places.)

Match each item with the correct statement below. -A measure of the sensitivity of profit changes to changes in sales volume.

Match each item with the correct statement below. -The point where total sales revenue equals total cost.

Which of the following equations is true?

Match each item with the correct statement below. -The use of fixed costs to extract higher percentage changes in profits as sales activity changes.

Given the following numbers from Webster Company, match the correct value with its appropriate term.Webster Company sells a product for $20.Unit cost information is as follows: Webster normally produces 50,000 units and the fixed overhead rate is based on this amount.Fixed selling and administrative expense is $87,000. -Contribution margin per unit

The ______________________ is the proportion of each sales dollar that must be used to cover variable costs.

Match each item with the correct statement below. -Sales revenue minus total variable cost or price minus unit variable cost.

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.

Yerke Company makes jungle gyms and tree houses for children.For jungle gyms, the price is $120 and variable expenses are $90 per unit.For tree houses, the price is $200 and variable expenses are $100.Total fixed expenses are $253,750.Last year, Yerke sold 12,000 gyms and 4,000 tree houses.Now suppose that Yerke expects tree house demand to increase from 4,000 to 8,000 units. - What is the number of jungle gyms sold at break-even?

Paney Company makes calendars.Information on cost per unit is as follows: - Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000.The price per calendar is $10.What is the variable product expense per unit?

Which of the following equations calculates sales dollars to earn target income?

Thompson Company makes and sells power tools.The budgeted sales are $450,000, the budgeted variable costs are $150,000, and the budgeted fixed cost is $230,000.What is the budgeted variable cost ratio? (Note: Round answer to two decimal places.)

Match each item with the correct statement below. -break-even point