Exam 18: Cost-Volume-Profit Analysis: Additional Issues

Use the following information for questions MacCloud Industries has two divisions-Standard and Premium. Each division has hundreds of different types of tennis racquets and tennis products. The following information is available: Standard Division Premium Division Total Sales \ 400,000 \ 600,000 \1 ,000,000 Variable costs 280,000 360,000 Contribution margin \4 120,000 \2 40,000 Total fixed costs \3 00,000 -What is the weighted-average contribution margin ratio?

Use the following information for questions Swanson Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs $6,660,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. -The weighted-average contribution margin ratio is

Use the following information for questions Roosevelt Corporation has a weighted-average unit contribution margin of $30 for its two products, Standard and Supreme. Expected sales for Roosevelt are 40,000 Standard and 60,000 Supreme. Fixed expenses are $1,800,000. -At the expected sales level, Roosevelt's net income will be

Sales mix is a measure of the percentage increase in sales from period to period.

In 2016, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $240,000. What was Teller's 2016 net income?

Hinge Manufacturing's cost of goods sold is $420,000 variable and $240,000 fixed. The company's selling and administrative expenses are $300,000 variable and $360,000 fixed. If the company's sales is $1,580,000, what is its net income?

In 2016, Hagar Corp. sold 3,000 units at $500 each. Variable expenses were $350 per unit, and fixed expenses were $780,000. The same variable expenses per unit and fixed expenses are expected for 2017. If Hagar cuts selling price by 4%, what is Hagar's break-even point in units for 2017?

Margin of safety in dollars is

For Sanborn Co., sales is $1,000,000, fixed expenses are $300,000, and the contribution margin per unit is $60. What is the break-even point?

Moonwalker's CVP income statement included sales of 5,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $110,000. Net income is

The degree of operating leverage

When a company is in its early stages of operation, its primary goal is to generate a target net income.

If fixed costs are $100,000 and weighted-average unit contribution margin is $50, then the break-even point in units is 2,000 units.

For Wickham Co., sales is $3,000,000, fixed expenses are $900,000, and the contribution margin ratio is 36%. What is required sales in dollars to earn a target net income of $600,000?

The CVP income statement classifies costs as variable or fixed and computes a contribution margin.

The margin of safety tells a company how far sales can drop before it will be operating at a loss.

Miller Manufacturing's degree of operating leverage is 1.5. Warren Corporation's degree of operating leverage is 3. Warren's earnings would go up (or down) by ________ as much as Miller's with an equal increase (or decrease) in sales.

Net income can be increased or decreased by changing the sales mix.

The required sales in units to achieve a target net income is

Use the following information for questions Swanson Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs $6,660,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. -What will be the total contribution margin at the break-even point?