Exam 3: Fundamentals of Cost-Volume-Profit Analysis

The average selling price is $.60 per unit,the average variable cost is $.36 per unit,and the total fixed costs are $1,500.If operating profits of $900 are desired,a sales volume of 2,500 units is necessary.($1,500 + 900)/($0.60 - .36)= 10,000 units.

Which of the following changes to a company's contribution income statement will always lower the break-even point (either in units or in dollars)?

Sanfran has the following data: How many units must Sanfran produce and sell in order to achieve a profit of $30,000 per month?

The Blue Company is currently selling its single product for $15.Variable costs are estimated to remain at 70% of the current selling price and fixed costs are estimated to be $4,800 per month.If Blue increases its selling price by 10%,its variable cost ratio will:

The contribution margin ratio is the contribution margin per unit divided by the selling price per unit.The statement made in the question is a definition of the contribution margin ratio.