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

Palmer Company Below is an income statement for Palmer Company: Refer to Palmer Company. Based on the cost and revenue structure on the income statement, what was Palmer's break-even point in dollars?

Pratt Corporation Information relating to the current operations of Pratt Corporation follows: Refer to Pratt Corporation. Pratt's break-even point was 1,000 units. Compute Pratt's sales price per unit.

A firm's break-even point in dollars can be found in one calculation using which of the following formulas?

Jordan Company Jordan Company manufactures a single product. Each unit sells for $15. The firm's projected costs are listed below: Refer to Jordan Company. What is Jordan's projected margin of safety for the current year?

If a company's fixed costs were to increase, the effect on a profit-volume graph would be that the

Alford, Brooks, and Fitch Companies Below are income statements that apply to three companies: Alford, Brooks, and Fitch: Refer to Alford, Brooks, and Fitch Companies. At sales of $100, which firm has the highest margin of safety?

Cost-volume-profit analysis is a technique available to management to understand better the interrelationships of several factors that affect a firm's profit. As with many such techniques, the accountant oversimplifies the real world by making assumptions. Which of the following is not a major assumption underlying CVP analysis?

A managerial preference for a very low degree of operating leverage might indicate that

Cowboy Duds Corporation manufactures a western-style hat that sells for $10 per unit. This is its sole product and it has projected the break-even point at 50,000 units in the coming period. If fixed costs are projected at $100,000, what is the projected contribution margin ratio?

On a break-even chart, the break-even point is located at the point where the total

The level of activity where a company's total revenues equal total costs is referred to as the ______________________________.

John Anderson Company Below is an income statement for John Anderson Company: Refer to John Anderson Company. What was the company's margin of safety?

Break-even analysis assumes over the relevant range that

On a CVP graph, the total revenue line intersects the y-axis at zero.

In a multiple-product firm, the product that has the highest contribution margin per unit will

Sunglo Corporation Sunglo Corporation manufactures and sells two products: A and B. The operating results of the company are as follows: In addition, the company incurred total fixed costs in the amount of $10,000. Refer to Sunglo Corporation. How many units would the company need to sell to produce a before-tax profit of $20,000?

When computing profit on an after-tax basis, it is necessary to divide the pretax profit by the effective tax rate.

On a CVP graph, the total variable cost line intersects the y-axis at zero.

When computing profit on an after-tax basis, it is necessary to divide the pretax profit by (1 - effective tax rate).

How do changes in volume affect the break-even point?