A recent income statement of Black Corporation reported the following data: $\begin{array}{lr} \text { Sales revenue } & \$ 8,000,000 \\ \text { Variable costs } & 5,000,000 \\ \text { Fixed costs } & 2,200,000 \end{array}$ If these data are based on the sale of 20,000 units, the break-even point would be:

A) 9,565 units (rounded). B) 11,000 units (rounded). C) 7,586 units (rounded). D) 14,667 units (rounded). E) None of the other answers is correct. A) 9,565 units (rounded). B) 11,000 units (rounded). C) 7,586 units (rounded). D) 14,667 units (rounded). E) None of the other answers is correct.

A recent income statement of Suni Corporation reported the following data: $\begin{array}{lr} \text { Sales revenue } & \$ 6,800,000 \\ \text { Variable costs } & 2,800,000 \\ \text { Fixed costs } & 2,500,000 \end{array}$ If these data are based on the sale of 20,000 units, the break-even point would be:

A) 7,500 units. B) 11,628 units. C) 12,500 units. D) 33,333 units. E) None of the other answers is correct. A) 7,500 units. B) 11,628 units. C) 12,500 units. D) 33,333 units. E) None of the other answers is correct.

At a volume level of 500,000 units, Sullivan reported the following information: $\begin{array}{lr} \text { Sales price } & \$ 60 \\ \text { Variable cost per unit } & 20 \\ \text { Fixed cost per unit } & 4 \end{array}$ The company's contribution-margin ratio is closest to:

A) 0.33. B) 0.40. C) 0.60. D) 0.67. E) None of the other answers is correct. A) 0.33. B) 0.40. C) 0.60. D) 0.67. E) None of the other answers is correct.

Vince's Pizza delivers pizzas to dormitories and apartments near a major state university. The company's annual fixed costs are $48,000. The sales price averages $9, and it costs the firm $3 to make and deliver each pizza. Required: A. $\begin{array}{lr} \text { Selling price per pizza } & \$ 9 \\ \text { Less: Variable cost per pizza } & \underline{3} \\ \text { Unit contribution margin } & \underline{\underline{\$ 6}} \\ \text { Break-even pizzas: } \$ 48,000 \div \$ 6=8,000 \end{array}$ A. How many pizzas must Vince's sell to break even? B. How many pizzas must the company sell to earn a target profit of $54,000? C. If budgeted sales total 9,900 pizzas, how much is the company's safety margin in dollars? D. Vince's assistant manager, an accounting major, has suggested that the firm should try to increase the contribution margin per pizza. Explain the meaning of "contribution margin" in layman's terms.

B. Pizzas to earn $54,000: ($48,000 + $5

Exam 7: Cost-Volume-Profit Analysis

Maddock Corporation's product no. H647 has a negative contribution margin. How can such a situation arise? Should the company continue to stock and sell product no. H647? Explain.

(Essay)

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Question 61

Cost-volume-profit analysis is based on certain general assumptions. Which of the following is not one of these assumptions?

(Multiple Choice)

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Question 62

Goldstone Company is studying the impact of the following: 1. An increase in sales price on the break-even point. 2. A decrease in fixed costs on the contribution margin. 3. An increase in the contribution margin on the break-even point. 4. A decrease in the variable cost per unit on the sales volume needed to achieve Goldstone's $68,000 target profit. 5. An increase in sales commissions on the contribution margin and the break-even point. 6. A decrease in anticipated advertising outlays on fixed cost and the break-even point. Required: Determine the impact of these operating changes (increase, decrease, no effect) on the item(s) noted.

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Question 63

Danielle sells a single product at $20 per unit. The firm's most recent income statement revealed unit sales of 100,000, variable costs of $800,000, and fixed costs of $400,000. If a $4 drop in selling price will boost unit sales volume by 20%, the company will experience:

(Multiple Choice)

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Question 64

Which of the following occurs if a company experiences a decrease in its fixed costs?

(Multiple Choice)

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Question 65

A recent income statement of Black Corporation reported the following data: Sales revenue \ 8,000,000 Variable costs 5,000,000 Fixed costs 2,200,000 If these data are based on the sale of 20,000 units, the break-even point would be:

(Multiple Choice)

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Question 66

The extent to which an organization uses fixed costs in its cost structure is measured by financial leverage.

(True/False)

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Question 67

O'Dale sells three products: R, S, and T. Budgeted information for the upcoming accounting period follows. The company's weighted-average unit contribution margin is:

(Multiple Choice)

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Question 68

A recent income statement of Suni Corporation reported the following data: Sales revenue \ 6,800,000 Variable costs 2,800,000 Fixed costs 2,500,000 If these data are based on the sale of 20,000 units, the break-even point would be:

(Multiple Choice)

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Question 69

At a volume level of 500,000 units, Sullivan reported the following information: Sales price \ 60 Variable cost per unit 20 Fixed cost per unit 4 The company's contribution-margin ratio is closest to:

(Multiple Choice)

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Question 70

Wellcom Corporation has the following sales mix for its three products: A, 20%; B, 35%; and C, 45%. Fixed costs total $400,000 and the weighted-average contribution margin is $100. How many units of product A must be sold to break-even?

(Multiple Choice)

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Question 71

The assumptions on which cost-volume-profit analysis is based appear to be most valid for businesses:

(Multiple Choice)

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Question 72

Vince's Pizza delivers pizzas to dormitories and apartments near a major state university. The company's annual fixed costs are $48,000. The sales price averages $9, and it costs the firm $3 to make and deliver each pizza. Required: A. Selling price per pizza \ 9 Less: Variable cost per pizza Unit contribution margin Break-even pizzas: \ 48,000\div\ 6=8,000 A. How many pizzas must Vince's sell to break even? B. How many pizzas must the company sell to earn a target profit of $54,000? C. If budgeted sales total 9,900 pizzas, how much is the company's safety margin in dollars? D. Vince's assistant manager, an accounting major, has suggested that the firm should try to increase the contribution margin per pizza. Explain the meaning of "contribution margin" in layman's terms.

(Essay)

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Question 73

Cleason sells a single product at $14 per unit. The firm's most recent income statement revealed unit sales of 80,000, variable costs of $800,000, and fixed costs of $560,000. Management believes that a $3 drop in selling price will boost unit sales volume by 20%. Which of the following correctly depicts how these two changes will affect the company's break-even point?

(Multiple Choice)

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Question 74

Seventh Heaven takes tourists on helicopter tours of Hawaii. Each tourist buys a $150 ticket; the variable costs average $60 per person. Seventh Heaven has annual fixed costs of $702,000. Required: A. Compute the average number of tours the company must conduct per month to break even. B. Compute the average sales revenue needed per month to produce a target average profit of $36,000 per month. See below (answer to "B"). C. Calculate the contribution margin ratio. D. Determine whether the actions that follow will increase, decrease, or not affect the company's break-even point. 1. A decrease in tour prices. 2. The termination of a salaried clerk (no replacement is planned). 3. A decrease in the number of tours sold.

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Question 75

When advanced manufacturing systems are installed, what effect does such installation usually have on fixed costs and the break-even point?

(Multiple Choice)

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Question 76

Which of the following occurs if a company experiences an increase in its fixed costs?

(Multiple Choice)

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Question 77

Brooklyn sells a single product to wholesalers. The company's budget for the upcoming year revealed anticipated unit sales of 31,600, a selling price of $20, variable cost per unit of $8, and total fixed costs of $360,000. If Brooklyn's unit sales are 300 units more than anticipated, its break-even point will:

(Multiple Choice)

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Question 78

Lawson, Inc. sells a single product for $12. Variable costs are $8 per unit and fixed costs total $360,000 at a volume level of 60,000 units. Assuming that fixed costs do not change, Lawson's break-even point would be:

(Multiple Choice)

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Question 79

The contribution-margin ratio is:

(Multiple Choice)

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Question 80

Showing 61 - 80 of 89

Maddock Corporation's product no. H647 has a negative contribution margin. How can such a situation arise? Should the company continue to stock and sell product no. H647? Explain.

Cost-volume-profit analysis is based on certain general assumptions. Which of the following is not one of these assumptions?

Danielle sells a single product at $20 per unit. The firm's most recent income statement revealed unit sales of 100,000, variable costs of $800,000, and fixed costs of $400,000. If a $4 drop in selling price will boost unit sales volume by 20%, the company will experience:

Which of the following occurs if a company experiences a decrease in its fixed costs?

A recent income statement of Black Corporation reported the following data: Sales revenue \ 8,000,000 Variable costs 5,000,000 Fixed costs 2,200,000 If these data are based on the sale of 20,000 units, the break-even point would be:

The extent to which an organization uses fixed costs in its cost structure is measured by financial leverage.

O'Dale sells three products: R, S, and T. Budgeted information for the upcoming accounting period follows. The company's weighted-average unit contribution margin is:

A recent income statement of Suni Corporation reported the following data: Sales revenue \ 6,800,000 Variable costs 2,800,000 Fixed costs 2,500,000 If these data are based on the sale of 20,000 units, the break-even point would be:

At a volume level of 500,000 units, Sullivan reported the following information: Sales price \ 60 Variable cost per unit 20 Fixed cost per unit 4 The company's contribution-margin ratio is closest to:

Wellcom Corporation has the following sales mix for its three products: A, 20%; B, 35%; and C, 45%. Fixed costs total $400,000 and the weighted-average contribution margin is $100. How many units of product A must be sold to break-even?

The assumptions on which cost-volume-profit analysis is based appear to be most valid for businesses:

When advanced manufacturing systems are installed, what effect does such installation usually have on fixed costs and the break-even point?

Which of the following occurs if a company experiences an increase in its fixed costs?

Lawson, Inc. sells a single product for $12. Variable costs are $8 per unit and fixed costs total $360,000 at a volume level of 60,000 units. Assuming that fixed costs do not change, Lawson's break-even point would be:

The contribution-margin ratio is:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

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