Exam 3: Cost-Volume-Profit Analysis

Firebird Ltd.sells packaged birdseed for $6.00 per package.Variable product costs are $3.00 per package.Fixed costs are $12,000 per period.How many packages must Firebird sell to earn a target operating income of $7,900?

When a company has the least fixed costs,the company is operating at a very high operating leverage.

If contribution margin decreases by $1 per unit,then operating profits will increase by $1 per unit.

In the graph method of CVP analysis,________.

Sales mix is the quantities or proportion of various products or services that constitute a company's total unit sales.

If a company would like to increase its degree of operating leverage it should ________.

Fixed costs equal $16,000,unit contribution margin equals $35,and the number of units sold equal 1,300.Operating income is ________.

In the profit-volume graph the point at which the profit-volume line and x-axis intersect is the breakeven point.

The margin of safety is the difference between ________.

In multiproduct situations,when sales mix shifts toward the product with the lowest contribution margin,the operating income will be lower.

Orion Company sells several products.Information of average revenue and costs is as follows: The company sells 12,000 units at the end of the year. If direct labor and direct material costs increase by $1 each,contribution margin ________.

Assume only the specified parameters change in a CVP analysis.The contribution margin percentage increases when ________.

Mount Carmel Company sells only two products,Product A and Product B. Mount Carmel sells two units of Product A for each unit it sells of Product B.Mount Carmel faces a tax rate of 30%. Required: a.What is the breakeven point in units for each product assuming the sales mix is 2 units of Product A for each unit of Product B? b.What is the breakeven point if Mount Carmel's tax rate is reduced to 25%,assuming the sales mix is 2 units of Product A for each unit of Product B? c.How many units of each product would be sold if Mount Carmel desired an after-tax net income of $73,500,facing a tax rate of 30%?

The breakeven point revenues is calculated by dividing ________.

Only variable production costs are used when calculating contribution margin.

The margin of safety refers to how many more sales are needed in order to breakeven,

Breakeven point in units is ________.

An increase in the tax rate will increase the breakeven point.

Sky High sells helicopters.During the current year,130 helicopters were sold resulting in $820,000 of sales revenue,$250,000 of variable costs,and $345,000 of fixed costs.Breakeven point in units is ________.

Sales total $400,000 when variable costs total $300,000 and fixed costs total $80,000.The breakeven point in sales dollars is ________.(Round interim calculations to two decimal places and the final answer to the nearest dollar. )