Exam 21: Cost-Volume-Profit Analysis

The budgeted income statement presented below is for Burkett Corporation for the coming fiscal year.Compute the number of units that must be sold in order to achieve a target pretax income of $130,000.

An important tool in predicting the volume of activity,the costs to be incurred,the sales to be made,and the profit to be earned is:

A CVP graph presents data on:

A cost that changes as volume changes,but at a nonconstant rate,is called a:

The following information is available for a company's utility cost for operating its machines over the last four months. Using the high-low method,the estimated total fixed cost for utilities is:

Craft Company and Jarmer Company each have sales of $200,000 and costs of $140,000.Craft Company's costs consist of $40,000 fixed and $100,000 variable,while Jarmer Company's costs consist of $100,000 fixed and $40,000 variable.Which company will suffer the greatest decline in profits if sales volume declines by 15%? Prepare income statements and compute degree of operating leverage to assess.

The contribution margin ratio:

Fuschia Company's contribution margin per unit is $12.Total fixed costs are $84,000.What is Fuschia's break-even point in units?

Flannigan Company manufactures and sells a single product that sells for $450 per unit;variable costs are $300.Annual fixed costs are $870,000.Current sales volume is $4,200,000.Compute the current margin of safety in dollars for Flannigan Company.

Cost-volume-profit analysis can be used to compute expected income from predicted sales and cost levels.

On a typical cost-volume-profit graph,unit sales are shown on the horizontal axis and both dollars of sales and dollars of costs are represented on the vertical axis.

The sales level at which a company neither earns a profit nor incurs a loss is the:

The ratio (proportion)of the sales volumes for the various products sold by a company is called the:

Use the following information to determine the margin of safety in dollars:

During March,a firm expects to its total sales to be $160,000,its total variable costs to be $95,000,and its total fixed costs to be $25,000.The contribution margin for March is:

The following information is available for a company's cost of sales over the last five months. Using the high-low method,the estimated total fixed cost is:

Forrester Company is considering buying new equipment that would increase monthly fixed costs from $120,000 to $150,000 and would decrease the current variable costs of $70 by $10 per unit.The selling price of $100 is not expected to change.Forrester's current break-even sales are $400,000 and current break-even units are 4,000.If Forrester purchases this new equipment,the revised contribution margin ratio would be:

Flannigan Company manufactures and sells a single product that sells for $450 per unit;variable costs are $300.Annual fixed costs are $870,000.Current sales volume is $4,200,000.Compute the contribution margin per unit.

A company's product sells at $12 per unit and has a $5 per unit variable cost.The company's total fixed costs are $98,000.The break-even point in units is:

Wolowitz Company's product has a contribution margin per unit of $62.50 and a contribution margin ratio of 25%.What is the per unit selling price of the product?