Exam 6: Cost-Volume-Profit Analysis

When using CVP analysis, why is it important to consider qualitative factors? Provide one example of a qualitative factor and explain how it might affect a decision.

For each unit sold , the contribution margin per unit:

Angelo's is a locally run and operated pizza parlor. Last month, the restaurant broke-even when 400 pizzas were served. The average variable costs per pizza are $2.50 and fixed costs for the month totaled $6,000. What is the average selling price of a pizza?

Assuming that the fixed cost do not change, with the sale of each additional unit (above the break-even point), net operating income will increase by the ____.

Blinson Manufacturing has the following product information available: If Blinson has calculated that it needs to sell 20,000 units in order to earn an after-tax target profit of $126,000, what were Blinson's fixed costs?

Joe's Coffee House Joe's Coffee House has the following information available for the month of July: Refer to the Joe's Coffee House information above. All else being equal, if Joe's increases the sales price per unit by 10%, net operating income will:

Village Manufacturing Village Manufacturing produces two types of products - Card Games and Puzzles. The following information is available related to each product: 60% of the products sold are Card Games and 40% are Puzzles. Refer to the Village Manufacturing information above. If total fixed costs are $24,500, how many Puzzles need to be sold in order for the company to break even?

While preparing a contribution margin income statement, the costs are shown into which of the two categories?

Crabtree Inc. produces two types of products - Gizmos and Gadgets. The following information is available related to each product: Three-fourths of the products sold are Gizmos and one-fourth are Gadgets. If total fixed costs are $50,000, how many total units need to be sold in order for the company to break even?

In 2011 Dillon Inc. had a total contribution margin of $100,000 and net operating income of $60,000. For the upcoming year, the company would like to earn a target profit of $80,000. Assuming sales volume is expected to be the same in the upcoming year as it was in the past year, give three separate options the company could implement in order to achieve their target profit in the upcoming year.

All else being equal, which of the following would cause the total contribution margin to increase?

All else being equal, explain how each of the following independent changes will affect a company's break-even point in terms of the number of units that need to be sold.

Tucker Corp. Tucker Corp. has the following product information: Refer to the Tucker Corp. information above. How many units need to be sold in order to earn a target profit of $542,400?

The ____ represents the amount of each additional sales dollar that contributes towards the payment of fixed costs and, ultimately, increasing net operating profit.

Mulvaney Inc. ignored the effect of income taxes in its calculation of the sales volume needed to achieve a target profit of $1,000,000. If the company considers the impact of income taxes in its calculation, which of the following statements would be true?

Stealth Software Inc. Stealth Software Inc. has the following information available from last year for one of its software products: Refer to the Stealth Software Inc. information above. If the sales price per unit is $20 and the company expects a 25% increase in sales volume this year along with a 10% decrease in fixed costs. What will be expected net operating income this year?

In a multi-product environment:

All else being equal, which of the following would cause the contribution margin to increase?

Bergman Inc. Bergman Inc. has the following product information available: Refer to the Bergman Inc. information above. What is the break-even point in units?

Trenton Inc. manufactures a single product. The following information is available for 2011 Required: