Exam 3: Cost-Volume-Profit Analysis

The controller at TellCo is examining her books.She determines that at the breakeven point of 5,000 units,variable costs total $4,000 and fixed costs total $7,000.Therefore,5,001st unit sold will contribute ________ to profits.(Round the final answer to the nearest cent. )

If Beta Corp's net income is $230,000 and the tax rate is 40%,then the company's planned operating income is ________.

Arthur's Plumbing reported the following: Revenues \ 4,500 Variable manufacturing costs \ 900 Variable nonmanufacturing costs \ 810 Fixed manufacturing costs \ 630 Fixed nonmanufacturing costs \ 545 Required: a.Compute contribution margin. b.Compute contribution margin percentage. c.Compute gross margin. d.Compute gross margin percentage. e.Compute operating income.

Frazer Corp sells several products.Information of average revenue and costs is as follows: Selling price per unit \ 28.5 Variable costs per unit: Direct material \ 6.00 Direct manufacturing labor \ 1.45 Manufacturing overhead \ 0.85 Selling costs \ 2.60 Annual fixed costs \ 125,000 What is the operating income earned if the company sells 20,000 units?

The following information is for High Corp: If targeted operating income is $50,000,then targeted sales revenue is ________.(Round the final answer to the nearest dollar. )

A firm operating at breakeven point will pay an income tax of 10%.

There is a difference between a good decision and a good outcome and one can exist without the other.

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. The contribution margin per unit is ________.

Slickware sells porcelain cups.The breakeven point is 5,000 units.The variable cost per unit is $18 and the fixed costs are $20,000.What is the contribution margin at 5,000 units?

You can find the breakeven revenues using total revenues,total variable costs,and total fixed costs;you don't need unit prices and costs.

Contribution margin percentage = Selling price - Variable cost per unit

Which of the following statements about net income (NI)is true?

In the graph method of CVP analysis,the horizontal line above the x-axis represents the total cost line.

If a companyʹ's breakeven revenue is $1,000 and its budgeted revenue is $1,250,then its margin of safety percentage is 20%.

Ballpark Concessions currently sells hot dogs.During a typical month,the stand reports a profit of $9,000 with sales of $50,000,fixed costs of $21,000,and variable costs of $0.64 per hot dog. Next year,the company plans to start selling nachos for $3 per unit.Nachos will have a variable cost of $0.72 and new equipment and personnel to produce nachos will increase monthly fixed costs by $8,808.Initial sales of nachos should total 5,000 units.Most of the nacho sales are anticipated to come from current hot dog purchasers,therefore,monthly sales of hot dogs are expected to decline to $20,000. After the first year of nacho sales,the company president believes that hot dog sales will increase to $33,750 a month and nacho sales will increase to 7,500 units a month. Required: a.Determine the monthly breakeven sales in dollars before adding nachos. b.Determine the monthly breakeven sales during the first year of nachos sales,assuming a constant sales mix of 1 hotdog and 2 units of nachos.

The classification of costs as variable and fixed depends on the relevant range,the length of the time horizon,and the specific decision situation.

A revenue driver is a variable,such as volume,that causally affects revenues.

The selling price per unit less the variable cost per unit is the ________.

Atlanta Radio Supply sells only two products,Product X and Product Y. Atlanta Radio Supply sells three units of Product X for each two units it sells of Product Y.Atlanta Radio Supply has a tax rate of 25%. Required: a.What is the breakeven point in units for each product,assuming the sales mix is 3 units of Product X for each two units of Product Y? b.How many units of each product would be sold if Atlanta Radio Supply desired an after-tax net income of $210,000,using its tax rate of 25%?

In a company with low operating leverage,________.