Exam 3: Analysis of Cost, Volume, and Pricing to Increase Profitability

Crown Company produces and sells two products. The following monthly data are provided: The break-even point for the current sales mix is 360 units (144 Slicer models and 216 Chopper models). What would be the impact on profit if 360 units are sold but 145 Slicer models are sold instead of 144? Slicer Chopper Unit selling price \ 10 \ 15 Variable manufacturing costs 6 9 Variable selling and administrative costs 1 1 Estimated unit sales per month 280 420

Consider the following cost-volume-profit graph: Based on the information in the graph, the breakeven point in sales dollars is approximately equal to:

The Victor Company sells two products. The following information is provided: What is the weighted average contribution margin per unit? Product A Product B Unit selling price \ 100 \ 150 Unit variable cost \ 30 \ 70 Number of units produced and sold 20,000 60,000

Techpro has a selling price of $10 and variable costs of $6. If both the selling price and the variable costs increase by 10%, the break-even point will not change.

Which of the following statements regarding cost-volume-profit analysis is incorrect?

Explain how to calculate contribution margin per unit.

Company X has variable costs per unit of $20, fixed costs of $300,000, and a break-even point in units of 60,000 units. If the sales price per unit decreases by $2 and the variable cost per unit decreases by $2, what would happen to the break-even point?

Falls Company has a contribution margin of $32 per unit and fixed costs of $500,000, and it desires to earn a profit of $100,000. What is the sales volume in units required to achieve this desired profit?

Assume that the company sells two products, X and Y, with contribution margins per unit of $8 and $4, respectively. What happens to the break-even point in sales dollars if the sales mix shifts to favor product Y? (In other words, sales of product Y will make up a higher percentage of the sales mix)

Hatfield Company sells several different products. It calculated that, for the current year, it would break even if it achieved sales of $850,000. The company actually achieved sales of $856,000, but it incurred a loss of $6,500. What could have caused this result? The costs and selling prices for the individual products did not change.

What is the formula for calculating contribution margin ratio?

The Travel Pro Company sells two kinds of luggage. The company projected the following cost information for the two products: The company's total fixed costs are expected to be $280,000.Based on this information, what is the combined number of units of the two products that would be required to break-even with the projected sales mix (round your answer to the nearest whole unit)? Rolling Bag Carry-on Bag Unit selling price \ 250 \ 120 Unit variable cost \ 110 \ 80 Number of units produced and sold 4,000 6,000

Write an equation for each item provided: Contribution margin per unit = \_\_\_\_\_\_ Contribution margin ratio = \_\_\_\_\_\_ Break-even in units = \_\_\_\_\_\_ Break-even in dollars = \_\_\_\_\_\_ Units required to achieve desired profit = \_\_\_\_\_\_ Dollars required to achieve desired profit = \_\_\_\_\_\_ Margin of safety ratio = \_\_\_\_\_\_

On a cost-volume-profit graph, the total revenue line begins at the break-even point and slopes upward to the right.

To find the break-even point for a company that sells several products, the analyst must make an assumption about what the sales mix will be and calculate a weighted average contribution margin based on that sales mix.

How does the cost-volume-profit model accommodate non-linear costs and revenues?

Select the incorrect statement regarding cost-volume-profit relationships for multiple products.

A pricing strategy that sets the price at a premium under the assumption that people will pay more for the product because of the product's brand name, media attention, or some other reason that has piqued the interest of the public is known as:

When performing sensitivity analysis, which of the following is an example of a variable that management may consider changing to answer "what if" questions?

Preston Company sells a product whose contribution margin ratio is 20%. Assuming fixed costs don't change, incremental sales of $50,000 will generate $20,000 of additional profit.