Exam 6: Financial Modeling for Short-Term Decision Making

Felix Company sells a single product at a price of $57 per unit.Variable costs per unit are $35 and total fixed costs are $719,400.Felix is considering the purchase of a new piece of equipment that would increase the fixed costs to $1,023,700,but decrease the variable costs per unit to $28. Required: a.If Felix Company expects to sell 40,000 units next year,should they purchase this new equipment? b.What would Felix's volume have to be to change your recommendation in A above?

TopSail Company TopSail Company produces one type of machine with the following costs and revenues for the year Refer to the TopSail Company.Calculate the selling price per unit.

In planning its operations for next year based on a sales forecast of $3,000,000,Jan's Auto Company,Inc.prepared the following estimated costs and expenses: Calculate sales dollars at the break-even point.

Arron company sells three products,X,Y,and Z.The company has fixed costs in the amount of $3,900.The following information is presented to you: REQUIRED:

TopSail Company TopSail Company produces one type of machine with the following costs and revenues for the year Refer to the TopSail Company.Calculate the contribution margin per unit.

Sensitivity analysis is used to show how the financial model responds to changes in which of the following?

Multiple products make using financial models more complex.To deal with this,managers can

What is the excess of projected sales units or dollars over the break-even point?

Which of the following is not an assumption of cost-volume-profit analysis?

Explain how to perform cost-volume-profit (CVP)analysis.

Which of the following is the correct formula for the break-even sales volume?

Which of the following is the correct formula to use to calculate the contribution margin per unit?

TopSail Company TopSail Company produces one type of machine with the following costs and revenues for the year Refer to the TopSail Company;how many units must be sold to make an operating profit of $300,000 for the year?

The cost structureof an organization refers to the which of the following?

What does (Contribution Margin for Product 1 ´ Sales Volume for Product 1)+ (Contribution Margin for Product 2 ´ Sales Volume for Product 2)+ (Contribution Margin for Product n ´ Sales volume for Product n)- Fixed Costs equal?

When sales dollars are used as the measure of volume in the cost-volume-profit equation,the focus is on solving for total revenue required to break even or a target profit rather than total units.Target Profit in Sales Dollars equals which of the following?

Explain how to use sales dollars as the measure of volume in performing cost-volume-profit (CVP)analysis.

The CVP model is one example of a financial model that can be used to calculate which of the following?

Explain the effect of taxes on financial modeling.

A company currently breaks even at 1,000 units.Its fixed costs are $40,000 and its variable costs are $10 per unit.What is the product's selling price per unit?