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

A company can sell all the units it can produce of either Product A or Product B but not both. Product A has a unit contribution margin of $16 and takes two machine hours to make and Product B has a unit contribution margin of $30 and takes three machine hours to make. If there are 5,000 machine hours available to manufacture a product, income will be

A shift from high-margin sales to low-margin sales

Curtis Corporation's contribution margin is $25 per unit for Product A and $30 for Product B. Product A requires 2 machine hours and Product B requires 4 machine hours. How much is the contribution margin per unit of limited resource for each product?

For Franklin, Inc., sales is $2,000,000, fixed expenses are $600,000, and the contribution margin ratio is 36%. What is net income?

In 2016, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. The same selling price, variable expenses, and fixed expenses are expected for 2017. What is Teller's break-even point in units for 2017?

For Wilder Corporation, sales is $1,600,000 (8,000 units), fixed expenses are $480,000, and the contribution margin per unit is $80. What is the margin of safety in dollars?

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 break-even point in dollars is

A company with low operating leverage will experience a sharp increase in net income with a given increase in sales.

According to the theory of constraints, a company must identify its constraints and find ways to reduce or eliminate them.

Greg's Breads can produce and sell only one of the following two products: Oven Contribution Hours Required Margin Per Unit Muffins 0.2 \ 3 Coffee Cakes 0.3 \ 4 The company has oven capacity of 1,500 hours. How much will contribution margin be if it produces only the most profitable product?

Use the following information for questions Mercantile Corporation has sales of $2,000,000, variable costs of $800,000, and fixed costs of $900,000. -Mercantile's margin of safety ratio is

What is the key factor in determining sales mix if a company has limited resources?

If Buttercup, Inc. sells two products with a sales mix of 75% : 25%, and the respective contribution margins are $80 and $240, then weighted-average unit contribution margin is $120.

Sales mix is not important to managers when different products have substantially different contribution margins.

When a company has limited resources to manufacture products, it should manufacture those products which have the highest unit contribution margin.

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 contribution margin?

If Sprinkle Industries has a margin of safety ratio of .60, it could sustain a 60 percent decline in sales before it would be operating at a loss.

Cost-volume-profit analysis is the study of the effects of

Operating leverage refers to the extent to which a company's net income reacts to a given change in fixed costs.

If contribution margin is $140,000, sales is $300,000, and net income is $40,000, then variable and fixed expenses are