Exam 19: 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

___________________ is the relative percentage in which a company sells its multiple products.

When a company has limited resources, management must decide which products to make and sell in order to maximize net income.

When a company has ________________, management must decide which products to make and sell in order to maximize net income.

Blue Chance Co. sells computers and video game systems. The business is divided into two divisions along product lines. Variable costing income statements for the current year are presented below: Instructions (a) Determine the sales mix and contribution margin ratio for each division. (b) Calculate the company's weighted-average contribution margin ratio. (c) Calculate the company's break-even point in dollars. (d) Determine the sales level, in dollars, for each division at the break-even point.

Warner Manufacturing reported sales of $2,000,000 last year (100,000 units at $20 each), when the break-even point was 80,000 units. Warner's margin of safety ratio is

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: -What is the break-even point in dollars?

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?

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

Which of the following statements is not true?

In CVP analysis, cost includes manufacturing costs but not selling and administrative expenses.

Contribution margin is the amount of revenue remaining after deducting

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 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?

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

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

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

Reynolds, Inc. manufactures and sells two products. Relevant per unit data concerning each product are given below: Instructions (a) Compute the contribution margin per unit of limited resource for each product. (b) If 1,000 additional machine hours are available, which product should be manufactured?

Cost structure refers to the relative proportion of fixed versus variable costs that a company incurs.

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.