Alford,Brooks,and Fitch Companies Below are income statements that apply to three companies: Alford,Brooks,and Fitch: $\begin{array}{lccc} &\text { AlfordCo.}&\text {BrooksCo.}&\text {FitchCo }\\\hline \text { Sales } & \$ 100 & \$ 100 & \$ 100 \\ \text { Variable costs } & (\underline{10}) & (\underline{20}) & (\underline{30}) \\ \text { Contribution margin } & \$ 90 & \$ 80 & \$ 70 \\ \text { Fixed costs } & (\underline{30}) & (\underline{20}) & (\underline{10}) \\ \text{Profit before taxes:}&\$ 60 &\$ 60 &\$ 60 \end{array}$ Refer to Alford,Brooks,and Fitch Companies.At sales of $100,which firm has the highest margin of safety?

A) Alpha Company B) Beta Company C) Fitch Company D) They all have the same margin of safety. A) Alpha Company B) Beta Company C) Fitch Company D) They all have the same margin of safety.

Ideal Company Ideal Company produces and sells a single product.Information on its costs follow: $\begin{array}{ll} \text{Variable costs:}\\ ~~\text { SG\&A } & \$ 2 \text { per unit } \\ ~~\text { Production } & \$ 4 \text { per unit } \\ \text { Fixed costs: } & \\ ~~\text { SG\&A } & \$ 12,000 \text { per year }\\ ~~\text { Production } & \$ 15,000 \text { per year } \end{array}$ Refer to Ideal Company.Assume Ideal Company produced and sold 5,000 units.At this level of activity,it produced a profit of $18,000.What was Ideal Company's sales price per unit?

A) $15.00 B) $11.40 C) $9.60 D) $10.00 A) $15.00 B) $11.40 C) $9.60 D) $10.00

The following information pertains to Mercury Company's cost-volume-profit relationships: $\begin{array}{ll} \text { Break-ever point in units sold } & 1,000 \\ \text { Variable costs per unit } & \$ 500 \\ \text { Total fixed costs } & \$ 150,000 \end{array}$ How much will be contributed to profit before taxes by the 1,001st unit sold?

A) $650 B) $500 C) $150 D) $0 A) $650 B) $500 C) $150 D) $0

Teal Company The following information relates to financial projections of Teal Company: $\begin{array}{ll} \text { Projected sales } & 60,000 \text { units } \\ \text { Projected variable costs } & \$ 2.00 \text { per unit } \\ \text { Projected fixed costs } & \$ 50,000 \text { per year } \\ \text { Projected unit salesprice } & \$ 7.00 \end{array}$ Refer to Teal Company.How many units would Teal Company need to sell to earn a profit before taxes of $10,000?

A) 25,714 B) 10,000 C) 8,571 D) 12,000 A) 25,714 B) 10,000 C) 8,571 D) 12,000

Teal Company The following information relates to financial projections of Teal Company: $\begin{array}{ll} \text { Projected sales } & 60,000 \text { units } \\ \text { Projected variable costs } & \$ 2.00 \text { per unit } \\ \text { Projected fixed costs } & \$ 50,000 \text { per year } \\ \text { Projected unit salesprice } & \$ 7.00 \end{array}$ Refer to Teal Company.If Teal Company achieves its projections,what will be its degree of operating leverage?

A) 6.00 B) 1.20 C) 1.68 D) 2.40 A) 6.00 B) 1.20 C) 1.68 D) 2.40

Ford Company The following information relates to financial projections of Ford Company: $\begin{array}{ll} \text { Projected sales } & 75,000 \text { units } \\ \text { Projected variable costs } & \$ 3.00 \text { per unit } \\ \text { Projected fixed costs } & \$ 60,000 \text { per year } \\ \text { Projected unit sales price } & \$ 8.00 \end{array}$ Refer to Ford Company.If Ford Company achieves its projections,what will be its degree of operating leverage?

A) 6.25 B) 1.19 C) 1.68 D) 3.00 A) 6.25 B) 1.19 C) 1.68 D) 3.00

Sunglo Corporation Sunglo Corporation manufactures and sells two products: A and BThe operating results of the company are as follows: $\begin{array}{lll} &\text{Product A}&\text{Product B}\\\hline \text { Sales in units } & 3,000 & 4,000 \\ \text { Sales price per unit } & \$ 12 & \$ 7 \\ \text { Variable costs per unit } & 6 & 4 \end{array}$ In addition,the company incurred total fixed costs in the amount of $10,000. Refer to Sunglo Corporation.How many total units would the company have needed to sell to break even?

A) 333 B) 1,111 C) 2,333 D) 3,332 A) 333 B) 1,111 C) 2,333 D) 3,332

Price Corporation Price Corporation manufactures and sells two products: A and B.The projected information on these two products for the coming year is presented below: $\begin{array}{lll} &Product~ A&Product~ B\\\hline \text { Sales in units } & 4,000 & 1,000 \\ \text { Sales price per unit } & \$ 12 & \$ 8 \\ \text { Variable costs per unit } & 8 & 4 \end{array}$ Total fixed costs for the company are projected at $10,000. Refer to Price Corporation.Compute Price Corporation's projected break-even point in total units.

The company anticipates a sales mix cons

Moonbeam Corporation Moonbeam Corporation manufactures and sells two products: A and B The operating results of the company are as follows: $\begin{array}{lll} &\text{Product A}&\text{Product B}\\\hline \text { Sales in units } & 2,000 & 3,000 \\ \text { Sales price per unit } & \$ 10 & \$ 5 \\ \text { Variable costs per unit } & 7 & 3 \end{array}$ In addition,the company incurred total fixed costs in the amount of $9,000. Refer to Moonbeam Corporation.How many total units would the company have needed to sell to break even?

A) 3,750 B) 750 C) 3,600 D) 1,800 A) 3,750 B) 750 C) 3,600 D) 1,800

Exam 9: Break-Even Point and Cost-Volume-Profit Analysis

Alford,Brooks,and Fitch Companies Below are income statements that apply to three companies: Alford,Brooks,and Fitch: AlfordCo. BrooksCo. FitchCo Sales \ 100 \ 100 \ 100 Variable costs () () () Contribution margin \ 90 \ 80 \ 70 Fixed costs () () () Profit before taxes: \ 60 \ 60 \ 60 Refer to Alford,Brooks,and Fitch Companies.At sales of $100,which firm has the highest margin of safety?

(Multiple Choice)

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Question 21

What major assumption do multi-product firms need to make in using CVP analysis that single-product firms need not make?

(Essay)

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Question 22

Ideal Company Ideal Company produces and sells a single product.Information on its costs follow: Variable costs: \nobreakspace\nobreakspace SG\&A \ 2 per unit \nobreakspace\nobreakspace Production \ 4 per unit Fixed costs: \nobreakspace\nobreakspace SG\&A \ 12,000 per year \nobreakspace\nobreakspace Production \ 15,000 per year Refer to Ideal Company.Assume Ideal Company produced and sold 5,000 units.At this level of activity,it produced a profit of $18,000.What was Ideal Company's sales price per unit?

(Multiple Choice)

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Question 23

Total fixed costs vary inversely with levels of production.

(True/False)

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Question 24

The following information pertains to Mercury Company's cost-volume-profit relationships: Break-ever point in units sold 1,000 Variable costs per unit \ 500 Total fixed costs \ 150,000 How much will be contributed to profit before taxes by the 1,001st unit sold?

(Multiple Choice)

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Question 25

Break-even point may be expressed in terms of units or dollars.

(True/False)

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Question 26

Teal Company The following information relates to financial projections of Teal Company: Projected sales 60,000 units Projected variable costs \ 2.00 per unit Projected fixed costs \ 50,000 per year Projected unit salesprice \ 7.00 Refer to Teal Company.How many units would Teal Company need to sell to earn a profit before taxes of $10,000?

(Multiple Choice)

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Question 27

Teal Company The following information relates to financial projections of Teal Company: Projected sales 60,000 units Projected variable costs \ 2.00 per unit Projected fixed costs \ 50,000 per year Projected unit salesprice \ 7.00 Refer to Teal Company.If Teal Company achieves its projections,what will be its degree of operating leverage?

(Multiple Choice)

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Question 28

Ford Company The following information relates to financial projections of Ford Company: Projected sales 75,000 units Projected variable costs \ 3.00 per unit Projected fixed costs \ 60,000 per year Projected unit sales price \ 8.00 Refer to Ford Company.If Ford Company achieves its projections,what will be its degree of operating leverage?

(Multiple Choice)

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Question 29

In CVP analysis,linear functions are assumed for

(Multiple Choice)

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Question 30

Sunglo Corporation Sunglo Corporation manufactures and sells two products: A and BThe operating results of the company are as follows: Product A Product B Sales in units 3,000 4,000 Sales price per unit \ 12 \ 7 Variable costs per unit 6 4 In addition,the company incurred total fixed costs in the amount of $10,000. Refer to Sunglo Corporation.How many total units would the company have needed to sell to break even?

(Multiple Choice)

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Question 31

Fixed costs per unit vary inversely with levels of production.

(True/False)

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Question 32

Break-even analysis assumes over the relevant range that

(Multiple Choice)

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Question 33

Incremental analysis focuses on factors that change from one decision to another.

(True/False)

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Question 34

Price Corporation Price Corporation manufactures and sells two products: A and B.The projected information on these two products for the coming year is presented below: Product\nobreakspaceA Product\nobreakspaceB Sales in units 4,000 1,000 Sales price per unit \ 12 \ 8 Variable costs per unit 8 4 Total fixed costs for the company are projected at $10,000. Refer to Price Corporation.Compute Price Corporation's projected break-even point in total units.

(Essay)

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Question 35

Dividing total fixed costs by the contribution margin ratio yields break-even point in sales dollars.

(True/False)

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Question 36

A firm estimates that it will sell 100,000 units of its sole product in the coming period.It projects the sales price at $40 per unit,the CM ratio at 60 percent,and profit at $500,000.What is the firm budgeting for fixed costs in the coming period?

(Multiple Choice)

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Question 37

What are the major assumptions of CVP analysis?

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Question 38

Moonbeam Corporation Moonbeam Corporation manufactures and sells two products: A and B The operating results of the company are as follows: Product A Product B Sales in units 2,000 3,000 Sales price per unit \ 10 \ 5 Variable costs per unit 7 3 In addition,the company incurred total fixed costs in the amount of $9,000. Refer to Moonbeam Corporation.How many total units would the company have needed to sell to break even?

(Multiple Choice)

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Question 39

What important information is conveyed by the margin of safety calculation in CVP analysis?

(Essay)

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Question 40

What major assumption do multi-product firms need to make in using CVP analysis that single-product firms need not make?

Total fixed costs vary inversely with levels of production.

The following information pertains to Mercury Company's cost-volume-profit relationships: Break-ever point in units sold 1,000 Variable costs per unit \ 500 Total fixed costs \ 150,000 How much will be contributed to profit before taxes by the 1,001st unit sold?

Break-even point may be expressed in terms of units or dollars.

In CVP analysis,linear functions are assumed for

Fixed costs per unit vary inversely with levels of production.

Break-even analysis assumes over the relevant range that

Incremental analysis focuses on factors that change from one decision to another.

Dividing total fixed costs by the contribution margin ratio yields break-even point in sales dollars.

A firm estimates that it will sell 100,000 units of its sole product in the coming period.It projects the sales price at $40 per unit,the CM ratio at 60 percent,and profit at $500,000.What is the firm budgeting for fixed costs in the coming period?

What are the major assumptions of CVP analysis?

What important information is conveyed by the margin of safety calculation in CVP analysis?

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting, support Department Allocations, and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters