Exam 4: Costvolumeprofit Analysis: a Managerial Planning Tool

Wendall Company sells only one product at a regular price of $7.50 per unit.Variable expenses are 60% of sales,and fixed expenses are $30,000.Management has decided to decrease the selling price to $6 in hopes of increasing its volume of sales.What is the contribution margin ratio when the selling price is reduced to $6 per unit?

ePiano makes electronic keyboards. The practice model price is $220, and its variable expenses are $190. The deluxe model price is $340, and its variable expenses are $250. The professional model price is $1,200 and its variable expenses are $800. Total fixed expenses are $187,000. In general, ePiano sells six practice models and three deluxe models for every professional model sold. -Refer to the Figure.What is the total contribution margin of six practice models,three deluxe models,and one professional model?

Given the following numbers from Books and Things, match the correct value with its appropriate term. Books and Things normally produces 100,000 units, and the fixed overhead rate is based on this amount. Fixed selling and administrative expense is $74,000. -Contribution margin per unit

McKenzie Company expects to produce and sell 1000 units next month.Data on costs follows: Per unit costs: Selling price \ 8 Variable manufacturing costs \ 2.75 Variable selling costs \ 0.25 Total costs: \ 1,000 Fixed manufacturing costs \ 125 Fixed selling costs \ 125 A. What is the break-even point in units? B. What is the break-even point in sales dollars? C. What is the expected operating income for next month? D. What is the margin of safety in dollars? E. What is the break-even point in units if fixed manufacturing costs increase by $\$ 500$ ? F. What is the break-even point in units if variable manufacturing costs decrease by $\$ 0.75$ ?

Magazine Inc.had the following income statement for the current year: Required: Sales \ 50,000 Variable expenses 30,000 Contribution margin \ 20,000 Fixed expenses 8,000 Operating income \ 12,000 A. Calculate the operating leverage ratio. B. If sales increase by 40 percent, what will be the percentage change in income? C. If sales decrease by 10 percent how much will income decrease?

Which of the following is a characteristic of the cost-volume-profit graph?

How is the sales mix expressed?

Plastic Gym makes children's jungle gyms and tree houses. The price of jungle gyms is $120, and its variable expenses are $90 per unit. The price of tree houses is $200, and its variable expenses are $100. Total fixed expenses are $253,750. Last year, Plastic Gym sold 12,000 gyms and 4,000 tree houses. -Refer to the Figure.Plastic Gym expects tree house demand to increase from 4,000 to 8,000 units per year.What is the new contribution margin ratio?

What would be the effect on the break-even point if sales remain the same and the margin of safety increases?

Hammer Company expects the following results for the next accounting period: The sales manager believes sales could be increased by 400 units if advertising expenditures are increased by $10,000.Suppose advertising expenditures are increased and sales increase by 400 units.What will be the effect on operating income? Sales \ 240,000 Variable costs \ 135,000 Fixed costs \ 40,000 Expected production and sales in units 3,000

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

What is the contribution margin?

Given the following numbers from Books and Things, match the correct value with its appropriate term. Books and Things normally produces 100,000 units, and the fixed overhead rate is based on this amount. Fixed selling and administrative expense is $74,000. -Variable cost ratio

The income statement for Thompson Manufacturing Company is as follows: What is the contribution margin per unit? Sales (10,000 units ) \ 150,000 Variable expenses 102,000 Contribution margin \ 48,000 Fixed expenses 36,000 Operating income \ 12,000

Plastic Gym makes children's jungle gyms and tree houses. The price of jungle gyms is $120, and its variable expenses are $90 per unit. The price of tree houses is $200, and its variable expenses are $100. Total fixed expenses are $253,750. Last year, Plastic Gym sold 12,000 gyms and 4,000 tree houses. -Refer to the Figure.Plastic Gym expects tree house demand to increase from 4,000 to 8,000 units.What is the sales revenue at break-even?

Given the following numbers from Books and Things, match the correct value with its appropriate term. Books and Things normally produces 100,000 units, and the fixed overhead rate is based on this amount. Fixed selling and administrative expense is $74,000. -Contribution margin ratio

Plastic Gym makes children's jungle gyms and tree houses. The price of jungle gyms is $120, and its variable expenses are $90 per unit. The price of tree houses is $200, and its variable expenses are $100. Total fixed expenses are $253,750. Last year, Plastic Gym sold 12,000 gyms and 4,000 tree houses. -Refer to the Figure.Plastic Gym expects tree house demand to increase from 4,000 to 8,000 units per year.How many jungle gyms are sold at break-even?

Date Company makes calendars. Information on cost per unit is as follows: Fixed marketing expense totalled $13,000, and fixed administrative expense totalled $35,000. The price per calendar is $10. Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.What is the break-even point in units?

Plastic Gym makes children's jungle gyms and tree houses. The price of jungle gyms is $120, and its variable expenses are $90 per unit. The price of tree houses is $200, and its variable expenses are $100. Total fixed expenses are $253,750. Last year, Plastic Gym sold 12,000 gyms and 4,000 tree houses. -Refer to the Figure.Plastic Gym expects tree house demand to increase from 4,000 to 8,000 units per year.How many tree houses are sold at break-even?

What items is the sales mix the relative combination of?