Exam 18: Cost Volume Profit Analysis

Alclear Pool & Spa presently provides a weekly maintenance service to 150 homes.Fixed costs are approximately $13 000 per quarter (13 weeks).Customers pay $270 per quarter for the weekly service.All contracts are written for one quarter (13 weeks).Now assume the contracts with customers are restructured such that the price per quarter is $300 and the contribution margin percentage is 57 per cent.Assume the tax rate is 25 per cent.Determine the sales dollars (to the nearest $100)necessary to obtain an after-tax profit of $9600 per quarter.

Maxie Pty Ltd makes and sells two types of shoes,Plain and Fancy.Product data is as follows: Sixty per cent of the sales in units are Plain and annual fixed expenses are $45 000.Determine the weighted average unit contribution margin.

Cost volume profit applied to the service industry A nursing home has the following annual budget: Which of the following statements is correct if fixed administration costs were increased by $50 000 and all other matters remained the same?

Cost volume profit analysis is based on the separation of fixed and variable costs.The analysis can be stated as an equation as follows: P = a(b - c)- d.In this statement of the equation,P is the profit,and:

A firm has an operating leverage factor of 4.This means that:

Chelonia Ltd manufactures small robot toys.It plans to introduce two products,Speedie and Spunkie.It is anticipated that the product mix will be 40% Speedie and 60% Spunkie.One unit of Speedie will be sold for $100,with variable cost equals $40.For a unit of Spunkie,the selling price will be $120 and the variable cost is $70.The fixed cost for producing the two products is $108 000.What is the break even point?

If break-even sales volume is $40 000 and contribution margin $7500,what is the net profit?

Cost volume profit analysis,including customer-related costs,must incorporate which of the following costs: i.market level costs ii.customer level costs iii.order level costs iv.batch level costs

Assume that selling price is greater than variable cost.Now suppose the selling price and the variable cost per unit increase by $5.00.What effect would these changes have on the contribution margin in dollars and on the contribution margin ratio? Dollar contribution margin Contribution margin ratio

To calculate the breakeven point,the equation (SP-VC)X - FC = 0 where SP = selling price per unit,VC = variable cost per unit,FC = fixed costs and X = the units at breakeven,can be used.

Cost volume profit applied to the service industry A nursing home has the following annual budget: Calculate the budgeted contribution margin ratio.

The contribution margin ratio is (all on a per unit basis):

Would you expect the following to be high or low in an automated firm: (1)safety margin, (2)operating leverage and (3)profit potential?

Chelonia Ltd manufactures small robot toys.It plans to introduce a new product,Speedie the robot tortoise.The following activity cost information is available: It is expected that each unit of Speedie will sell for $23.The direct material cost for unit is $10.What is the break-even point in units? (For simplicity,assume that you can have partial moves and partial batches - that is,no need to round up the number of batches and the number of moves)

Chelonia Ltd manufactures small robot toys.It plans to introduce a new product,Spunkie,which is a solar-powered robot jellyfish.Initially,Chelonia Ltd plans to sell each unit of Spunkie for $95,with an expectation that 2500 units can be sold.The variable cost per unit is $30.The management accountant at Chelonia Ltd is exploring the idea of making some modification to Spunkie which will cost $2 per unit.This modification can allow them to increase the price to $100.This however will lower the demand to 2000 units.Should Chelonia Ltd reduce the price of Spunkie?

The firm's fixed costs are $60 000,variable cost per unit is $15 and selling price per unit is $20.The break-even point in sales dollars is:

The operating leverage factor is calculated as follows:

The firm uses activity-based costing and has the following cost structure: selling price $50,batch cost $20 000,unit level costs $30 per unit,facility costs $120 000 and product costs $60 000.What is the break-even point in units?

If the contribution margin is $10,the selling price per unit is $25 and the fixed costs are $45 000,what is the number of units that must be sold to break even?

Which of the following changes will affect the unit contribution margin?