Exam 16: Cost-Volume-Profit Analysis

At a price of $48, the estimated monthly sales of a product are 18,000 units. Variable costs include manufacturing costs of $27 and distribution costs of $9. Fixed costs are $60,000 per month. Required: Determine each of the following values: a. Unit contribution margin b. Monthly break-even unit sales volume c. Before-tax monthly profit d. Monthly margin of safety in units

At a monthly volume of $31,250, a company incurs variable cost of $23,750 and fixed costs of $7,500. Required: Determine each of the following values: a. Variable cost ratio b. Contribution margin ratio c. Monthly break-even dollar sales volume d. Monthly margin of safety in dollars

In a cost-volume-profit graph, the slope of the total revenue line represents

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?

Biscuit Company sells its product for $50. In addition, it has a variable cost ratio of 55 percent and total fixed costs of $6,875. How many units must be sold in order to obtain a before-tax profit of $12,000?

Victoria Company produces two products, X and Y, which account for 60 percent and 40 percent, respectively, of total sales dollars. Contribution margin ratios are 50 percent for X and 25 percent for Y. Total fixed costs are $120,000. What is Patricia's break-even point in sales dollars?

Information about the Harmonious Company's two products includes: What is the total monthly sales volume in units required to break even when the sales mix in units is 70 percent Product X and 30 percent Product Y?

Target after-tax profit must be converted into profit to calculate units or revenue needed.

Summersville Production Company had the following projected information for 2016: What level of sales dollars is needed to obtain a target before-tax profit of $75,000?

When a company sells more units than the break-even point, the are positive.

The operating leverage shows how far the company's actual sales or units are from the break­even point.

Fantasmas Incorporated had the following information: What is the break-even point in units using ABC?

Units to earn target profit equal total fixed costs plus target profit divided by the contribution margin ratio.

Sales mix refers to

The Mildmanner Corporation has the following data for 2016: The margin of safety expressed in sales revenue will be

When a company sells more units than the break-even point,

Tiramisu Company projected the following information for next year: Selling price per unit $60.00 Contribution margin per unit $30.00 Total fixed costs $100,000 Tax rate 20% How many units must be sold to obtain an after-tax profit of $40,000?

Jamie Quinn, a sole proprietor, has the following projected figures for next year: What selling price per unit is needed to obtain a before-tax profit of $270,000 at a volume of 4,000 units?

Biscuit Company sells its product for $50. In addition, it has a variable cost ratio of 45 percent and total fixed costs of $6,875. What is the break-even point in units for Biscuit Company?

Assuming all other things are equal, if there was a decrease in the break-even point, fixed costs must have: