$\begin{array}{lr} \text { Direct materials } & \$ 1.50 \\ \text { Direct labour } & 1.20 \\ \text { Variable overhead } & 0.90 \\ \text { Variable marketing expense } & 0.40 \end{array}$ -Refer to the Figure.What is the variable expense ratio?

A) 36% B) 40% C) 46% D) 50% A) 36% B) 40% C) 46% D) 50%

Ashley Furniture provided the following data for next month: $\begin{array}{lr} \text { Selling price per unit } & \$ 500 \\ \text { Variable manufacturing costs per unit } & \$ 150 \\ \text { Fixed manufacturing costs per unit } & \$ 75 \\ \text { Variable selling costs per unit } & \$ 50 \\ \text { Fixed selling costs per unit } & \$ 50 \\ \text { Expected production and sales } & 2,000 \text { units } \end{array}$ A. What is contribution margin per unit? B. What is the contribution margin ratio? C. What is the break-even point in units? D. What are the sales in dollars needed to obtain on operating income of $\$ 20,000$ ?

The answer of Ashley Furniture provided the following data for...

Assume the following information: $\begin{array}{lr} \text { Variable cost ratio } & 80 \% \\ \text { Total fixed costs } & \$ 60,000 \end{array}$ What volume of sales dollars is needed to break even?

A) $12,000 B) $48,000 C) $75,000 D) $300,000 A) $12,000 B) $48,000 C) $75,000 D) $300,000

Magazine Inc.had the following income statement for the current year: \[\begin{array} { l r } \text { Sales } & \$ 50,000 \\ \text { Variable expenses } & 30,000 \\ \text { Contribution margin } & \$ 20,000 \\ \text { Fixed expenses } & 8,000 \\ \text { Operating income } & \$ 12,000 \end{array}\] Required: A. $\quad$Calculate the operating leverage ratio. B. $\quad$If sales increase by 40 percent, what will be the percentage change in income? C. $\quad$If sales decrease by 10 percent how much will income decrease?

The answer of Magazine Inc.had the following income statement for...

$\begin{array}{lr} \text { Direct materials } & \$ 1.50 \\ \text { Direct labour } & 1.20 \\ \text { Variable overhead } & 0.90 \\ \text { Variable marketing expense } & 0.40 \end{array}$ -Refer to the Figure.How many units must be sold to yield a targeted income of $36,000?

A) 5,833 B) 6,000 C) 12,000 D) 14,000 A) 5,833 B) 6,000 C) 12,000 D) 14,000

Given the following numbers from Books and Things,match the correct value with its appropriate term.Books and Things sells a product for $40.Unit cost information is as follows: $\begin{array}{lr} \text { Direct materials } & \$ 14 \\ \text { Direct labour } & \$ 6 \\ \text { Variable overhead } & \$ 8 \\ \text { Fixed overhead } & \$ 2 \end{array}$ Books and Things normally produces 100,000 units,and the fixed overhead rate is based on this amount.Fixed selling and administrative expense is $74,000. -Break-even point (in dollars)

A) $12 B) 30% C) $28 D) 70% E) $580,000 F)14,500 A) $12 B) 30% C) $28 D) 70% E) $580,000 F)14,500

$\begin{array}{lr} \text { Sales } & \$ 540,000 \\ \text { Variable costs } & \$ 378,000 \\ \text { Fixed costs } & \$ 120,000 \\ \text { Expected production and sales in units } & 40,000 \end{array}$ -Refer to the Figure.How many sales in dollars are needed to generate a profit of $30,000?

A) $100,000 B) $150,000 C) $214,286 D) $500,000 A) $100,000 B) $150,000 C) $214,286 D) $500,000

Income statements for two different wineries are as follows: $\begin{array}{lrr}&\text { White Wine } & \text { Red Wine } \\ &\text { Company } & \text { Company }\\\hline \text { Sales } & \$ 400,000 & \$ 400,000 \\ \text { Less: Variable costs } & 300,000 & 200,000 \\ \text { Contribution margin } & \$ 100,000 & \$ 200,000 \\ \text { Less: Fixed costs } & 50,000 & 150,000 \\ \text { Onerating income } & \$ 50,000 & \$ 50,000 \end{array}$ A. $\quad$Calculate the degree of operating leverage for each firm. B. $\quad$Calculate the margin of safety in doll ars for each firm. C. $\quad$Determine the operating income for each firm if sales increase by $20 \%$.

The answer of Income statements for two different wineries are...

Exam 4: Costvolumeprofit Analysis: a Managerial Planning Tool

Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.What is the variable expense ratio?

(Multiple Choice)

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Question 81

Ashley Furniture provided the following data for next month: Selling price per unit \ 500 Variable manufacturing costs per unit \ 150 Fixed manufacturing costs per unit \ 75 Variable selling costs per unit \ 50 Fixed selling costs per unit \ 50 Expected production and sales 2,000 units A. What is contribution margin per unit? B. What is the contribution margin ratio? C. What is the break-even point in units? D. What are the sales in dollars needed to obtain on operating income of $\$ 20,000$ ?

(Essay)

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Question 82

Which of the following is an assumption of a cost-volume-profit analysis?

(Multiple Choice)

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Question 83

The linear equation for total cost is (unit variable cost × units)+ fixed cost.

(True/False)

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Question 84

Which of the following measures the percentage change in profits resulting from a percentage change in sales?

(Multiple Choice)

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Question 85

Assume the following information: Variable cost ratio 80\% Total fixed costs \ 60,000 What volume of sales dollars is needed to break even?

(Multiple Choice)

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Question 86

Match each item with the correct statement below. -Variable cost per unit

(Multiple Choice)

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Question 87

Magazine Inc.had the following income statement for the current year: Sales \ 50,000 Variable expenses 30,000 Contribution margin \ 20,000 Fixed expenses 8,000 Operating income \ 12,000 Required: A. $\quad$ Calculate the operating leverage ratio. B. $\quad$ If sales increase by 40 percent, what will be the percentage change in income? C. $\quad$ If sales decrease by 10 percent how much will income decrease?

(Essay)

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Question 88

Zena Inc.has the following information for the current year: Selling price per unit \ 10 Wariable costs per unit \ 6 Fixed costs \1 ,000 Required: Prepare a cost-volume-profit graph identifying the following items: A. $\quad$ Total costs line B. $\quad$ Total fixed costs line C. $\quad$ Total variable costs line D. $\quad$ Total revenues line E. $\quad$ Break-even point in sales dollars F. $\quad$ Break-even point in units G. $\quad$ Profit area H. $\quad$ Loss area

(Essay)

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Question 89

Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.How many units must be sold to yield a targeted income of $36,000?

(Multiple Choice)

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Question 90

Go For It Company sells go-carts at $1000 each,incurs a variable cost per unit of $600,and has a total fixed expense of $75,000.How many units must be sold to achieve a target operating income of $55,000?

(Multiple Choice)

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Question 91

Refer to the Figure.What is the sales mix of jungle gyms and tree houses (rounded down to whole numbers)?

(Multiple Choice)

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Question 92

Managers can use CVP analysis to handle risk and uncertainty.

(True/False)

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Question 93

Given the following numbers from Books and Things,match the correct value with its appropriate term.Books and Things sells a product for $40.Unit cost information is as follows: Direct materials \ 14 Direct labour \ 6 Variable overhead \ 8 Fixed overhead \ 2 Books and Things normally produces 100,000 units,and the fixed overhead rate is based on this amount.Fixed selling and administrative expense is $74,000. -Break-even point (in dollars)

(Multiple Choice)

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Question 94

The impact on a firm's income resulting from a change in the number of units sold can be assessed by multiplying the unit contribution margin by the change in units sold assuming that fixed costs remain the same.

(True/False)

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Question 95

Direct fixed expenses are the fixed costs that are NOT traceable to the segments and would remain even if one of the segments was eliminated.

(True/False)

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Question 96

Refer to the Figure.What is the overall sales revenue at break-even?

(Multiple Choice)

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Question 97

Sales \ 540,000 Variable costs \ 378,000 Fixed costs \ 120,000 Expected production and sales in units 40,000 -Refer to the Figure.How many sales in dollars are needed to generate a profit of $30,000?

(Multiple Choice)

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Question 98

Income statements for two different wineries are as follows: White Wine Red Wine Company Company Sales \ 400,000 \ 400,000 Less: Variable costs 300,000 200,000 Contribution margin \ 100,000 \ 200,000 Less: Fixed costs 50,000 150,000 Onerating income \ 50,000 \ 50,000 A. $\quad$ Calculate the degree of operating leverage for each firm. B. $\quad$ Calculate the margin of safety in doll ars for each firm. C. $\quad$ Determine the operating income for each firm if sales increase by $20 \%$ .

(Essay)

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Question 99

How is the sales mix expressed?

(Multiple Choice)

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Question 100

Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.What is the variable expense ratio?

Which of the following is an assumption of a cost-volume-profit analysis?

The linear equation for total cost is (unit variable cost × units)+ fixed cost.

Which of the following measures the percentage change in profits resulting from a percentage change in sales?

Assume the following information: Variable cost ratio 80\% Total fixed costs \ 60,000 What volume of sales dollars is needed to break even?

Match each item with the correct statement below. -Variable cost per unit

Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.How many units must be sold to yield a targeted income of $36,000?

Go For It Company sells go-carts at $1000 each,incurs a variable cost per unit of $600,and has a total fixed expense of $75,000.How many units must be sold to achieve a target operating income of $55,000?

Refer to the Figure.What is the sales mix of jungle gyms and tree houses (rounded down to whole numbers)?

Managers can use CVP analysis to handle risk and uncertainty.

The impact on a firm's income resulting from a change in the number of units sold can be assessed by multiplying the unit contribution margin by the change in units sold assuming that fixed costs remain the same.

Direct fixed expenses are the fixed costs that are NOT traceable to the segments and would remain even if one of the segments was eliminated.

Refer to the Figure.What is the overall sales revenue at break-even?

Sales \ 540,000 Variable costs \ 378,000 Fixed costs \ 120,000 Expected production and sales in units 40,000 -Refer to the Figure.How many sales in dollars are needed to generate a profit of $30,000?

How is the sales mix expressed?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

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