Exam 3: Fundamentals of Cost-Volume-Profit Analysis

The Dooley Co.manufactures two products,Baubles and Trinkets.The following are projections for the coming year: How many Baubles will be sold at the break-even point,assuming that the facilities are jointly used with the sales mix remaining constant?

If both the variable cost per unit and the selling price per unit increase,the new contribution margin ratio in relation to the old contribution margin ratio will be:

Both total revenues (TR)and total costs (TC)are likely to be affected by changes in the output.Fixed costs are not affected by changes in output,up to the point where capacity must be changed,thereby changing fixed costs as well.

If the fixed costs for a product decrease and the variable costs (as a percentage of sales dollars)decrease,what will be the effect on the contribution margin ratio and the break-even point,respectively?

The following pertains to Clove Co.for the year ending December 31,2012: Clove's margin of safety is: (CPA adapted)

Kanmore produces and sells three products.Last month's results are as follows: Fixed costs total $200,000.What is Kanmore's break-even sales volume? (Assume the current product mix. )

The contribution margin ratio is 25% for Grain Company and the break-even point in sales is $200,000.If Grain Company's target operating profit is $60,000,sales would have to be:

The JK Manufacturing Company sells two products,J and K.J has a higher contribution margin ratio than K.If the product mix shifts towards K,the company's break-even point in total units (i.e. ,J plus K)will increase.The weighted-average contribution margin will be less when the sales mix shifts to the lower profit product.

A decrease in the margin of safety would be caused by a(n):

Barnes Corporation manufactures skateboards and is in the process of preparing next year's budget.The pro forma income statement for the current year is presented below. For the coming year,the management of Barnes Corporation anticipates a 10 percent increase in sales,a 12 percent increase in variable costs,and a $45,000 increase in fixed costs.The break-even point for next year would be:

Given the following information: What would expected net income be if the company experienced a 10 percent increase in fixed costs and a 10 percent increase in sales volume?

RedTail Manufacturing has the following data: If RedTail has actual monthly sales of $1,500,000 and desires an operating profit of $50,000 per month,what is the margin of safety in sales dollars?

Given the following data: If sales decrease by 500 units,by what percent would fixed costs have to be reduced by to maintain current net income?

Mancuso Corporation has provided its contribution format income statement for January.The company produces and sells a single product. If the company sells 3,100 units,its total contribution margin should be closest to:

An increase in an organization's tax rate will cause an increase in its break-even point.Taxes have no impact on the break-even point because break even is calculated on before-tax profit.

James Company has a margin of safety percentage of 20%.The break-even point is $200,000 and the variable costs are 45% of sales.Given this information,the operating profit is:

Before-tax operating profits are equal to the after-tax operating profits divided by (1 - tax rate).After-tax profit = before-tax profit - before-tax profit × tax rate.

If the fixed costs are $2,400,targeted before-tax operating profit is $1,200,tax rate is 25%,selling price per unit is $2,and contribution margin ratio is 40%,then the sales volume is 9,000 units.(2,400 + 1,200)/(2 × 40%)= 4,500 units.

A company's break-even point will not be changed by:

KR Sales had $1,200,000 in sales last month.The variable cost ratio was 60% and operating profits were $80,000.What is KR's break-even sales volume?