Exam 16: Cost-Volume-Profit Analysis

Symbiosis Company had the following information: Suppose Symbiosis could reduce setup costs by $500 per setup and could reduce the number of engineering hours needed to 1,216 2/3 hours. How many units must be sold to break even in this case?

Information about the Harmonious Company's two products includes: If the sales mix in units is 50 percent Product X and 50 percent Product Y, the monthly break-even total sales dollars is

Summersville Production Company had the following projected information for 2014: What level of sales dollars is needed to obtain a target before-tax profit of $75,000?

Nonesuch Company sells only one product at a regular price of $7.50 per unit. Variable expenses are 60 percent of sales and fixed expenses are $30,000. Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales. What is the new break-even point in units for Nonesuch Company when the selling price is $6.00?

In multiple-product analysis, direct fixed costs are

Increases in sales of low contribution margin products decrease the break-even point.

In a cost-volume-profit graph,

Sales ´ Contribution Margin is a short-cut of what formula?

In the Cost-Volume-Profit analysis, what are two ways management can deal with risk and uncertainty?

A very high degree of operating leverage indicates a firm

Cost-volume-profit analysis focuses on the break-even point and the impact of changes in fixed costs and price.

If all else is the same, if the break-even point increases, then the variable cost per unit must have __________ .

A decrease in the sales price in the basic cost-volume-profit model would

The __________ ratio expresses variable costs in terms of sales dollars.

Uncertainty regarding costs, prices, and sales mix affect the break-even point.

Sales revenue to earn target profits equals total fixed costs plus target profit divided by the contribution margin.

Nonesuch Company sells only one product at a regular price of $7.50 per unit. Variable expenses are 60 percent of sales and fixed expenses are $30,000. Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales. What sales dollar level is needed to obtain a before-tax profit of $60,000 when the selling price is $6.00 per unit?

Cain Company and Abel Corporation have the following income statements for 2014: What is the degree of operating leverage for Cain Company for 2014?

Nonesuch Company sells only one product at a regular price of $7.50 per unit. Variable expenses are 60 percent of sales and fixed expenses are $30,000. Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales. What is the sales dollars level required to break even at the old price of $7.50?

Which of the following is NOT a use of CVP (Cost-Volume-Profit) analysis?