Exam 3: Cost-Volume-Profit Analysis

A decision table is a summary of the alternative actions,events,outcomes,and probabilities of events.

The Holiday Card Company,a producer of specialty cards,has asked you to complete several calculations based upon the following information: Required: a.What is the breakeven point in cards? b.What sales volume is needed to earn an after-tax net income of $13,028.40? c.How many cards must be sold to earn an after-tax net income of $18,480?

Answer the following questions using the information below: The following information is for the Jeffries Corporation: Total fixed costs $\quad\quad\quad \$ 75,000$ -Assume the sales mix consists of three units of Product A and one unit of Product B.If the sales mix shifts to four units of Product A and one unit of Product B,then the breakeven point will ________.

Craylon Manufacturing produces a single product that sells for $130.Variable costs per unit equal $30.The company expects total fixed costs to be $60,000 for the next month at the projected sales level of 1,200 units.In an attempt to improve performance,management is considering a number of alternative actions.Each situation is to be evaluated separately.Suppose that management believes that a $12,000 increase in the monthly advertising expense will result in a considerable increase in sales.Sales must increase by ________ to justify this additional expenditure.

If breakeven point is 1,000 units,each unit sells for $31,and fixed costs are $30,000,then on a graph the ________.

Which of the following will increase a company's breakeven point?

Which of the following is true of cost-volume-profit analysis?

Frazer Corp sells several products.Information of average revenue and costs is as follows: Selling price per unit \ 28.50 Variable costs per unit: Direct material \ 6.00 Direct manufacturing labor \ 1.45 Manufacturing overhead \ 0.85 Selling costs \ 2.50 Annual fixed costs \ 135,000 If the company decides to lower its selling price by 14.25%,but continues to sell 16,000 units,the operating income is reduced by ________.

Quality Stores,Inc. ,sells several products.Information of average revenue and costs is as follows: Selling price per unit \ 20 Variable costs per unit: Direct material \ 4 Direct manufacturing labor \ 1.80 Manufacturing overhead \ 0.4 Selling costs \ 3 Annual fixed costs \ 96,000 What is the contribution margin percentage? (Round your answer to the nearest whole percent. )

Ruben is a travel agent.He intends to sell his customers a special round-trip airline ticket package.He is able to purchase the package from the airline for $140 each.The round-trip tickets will be sold for $230 each and the airline intends to reimburse Ruben for any unsold ticket packages.Fixed costs include $5,500 in advertising costs.How many ticket packages will Ruben need to sell in order to achieve $60,000 of operating income?

If a company has a degree of operating leverage of 5 and sales increase by 30%,then ________.

The difference between total revenues and total variable costs is called contribution margin.

Assuming a constant mix of 3 units of X for every 1 unit of Y. The breakeven point in units would be ________.

Ruben is a travel agent.He intends to sell his customers a special round-trip airline ticket package.He is able to purchase the package from the airline for $160 each.The round-trip tickets will be sold for $200 each and the airline intends to reimburse Ruben for any unsold ticket packages.Fixed costs include $5,200 in advertising costs.How many ticket packages will Ruben need to sell to break even?

If unit outputs exceed the breakeven point ________.

Ruben intends to sell his customers a special round-trip airline ticket package.He is able to purchase the package from the airline carrier for $170 each.The round-trip tickets will be sold for $200 each and the airline intends to reimburse Ruben for any unsold ticket packages.Fixed costs include $5,140 in advertising costs.For every $27,000 of ticket packages sold,operating income will increase by ________.

In CVP analysis,the graph of total revenues versus total costs is linear in nature relation to units sold within a relevant range and time period.

Globus Autos sells a single product.8,000 units were sold resulting in $83,000 of sales revenue,$21,000 of variable costs,and $10,000 of fixed costs.If Globus reduces the selling price by $1.20 per unit,the new margin of safety is:

SaleCo sells 11,000 units resulting in $110,000 of sales revenue,$50,000 of variable costs,and $45,000 of fixed costs.To achieve $150,000 in operating income,sales must total ________.(Round intermediate calculations to two decimal places and the final answer to the nearest dollar. )

The three methods used to study CVP analysis are graph method,contribution method,and equation method.