Question 1

For the past year, Pedi Company had fixed costs of $70,000, unit variable costs of $32, and a unit selling price of $40. For the coming year, no changes are expected in revenues and costs, except that property taxes are expected to increase by $10,000. Determine the break-even sales 
(units) for 
(a) the past year and 
(b) the coming year.

Accepted Answer

The answer of For the past year, Pedi Company had...

Question 2

For the coming year, River Company estimates fixed costs at $109,000, the unit variable cost at $21, and the unit selling price at $85. Determine 
(a) the break-even point in units of sales, 
(b) the unit sales required to realize operating income of $150,000 and 
(c) the probable operating income if sales total $500,000.?Round units to the nearest whole number and percentage to one decimal place.

Accepted Answer

The answer of For the coming year, River Company estimates...

Question 3

If a business had a capacity of $10,000,000 of sales, actual sales of $6,000,000, break-even sales of $4,200,000, fixed costs of $1,800,000, and variable costs of 60% of sales, what is the margin of safety expressed as a percentage of sales?

Accepted Answer

The answer of If a business had a capacity of...

Question 4

Tom Company reports the following data:Sales$600,000Variable costs400,000Fixed costs100,000Determine Tom Company's operating leverage. If required, round answer to nearest whole number.

Accepted Answer

The answer of Tom Company reports the following data:Sales$600,000Variable costs400,000Fixed...

Question 5

For the past year, Iris Company had fixed costs of $6,708,000, a unit variable cost of $444, and a unit selling price of $600. For the coming year, no changes are expected in revenues and costs, except that a new wage contract will increase variable costs by $6 per unit. Determine the break-even sales 
(units) for 
(a) the past year and 
(b) the coming year.

Accepted Answer

The answer of For the past year, Iris Company had...

Question 6

A company with a break-even point at $900,000 in sales revenue had fixed costs of $225,000. When actual sales were $1,000,000, variable costs were $750,000. Determine 
(a) the margin of safety expressed in dollars, 
(b) the margin of safety expressed as a percentage of sales, 
(c) the contribution margin ratio, and 
(d) the operating income.

Accepted Answer

The answer of A company with a break-even point at...

Question 7

Grant Company has sales of $300,000, and the break-even point in sales dollars is $225,000. Determine the company's margin of safety percentage. If required, round answer to nearest whole number.

Accepted Answer

The answer of Grant Company has sales of $300,000, and...

Question 8

Bobby Company has fixed costs of $160,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below.?  The sales mix for products X and Y is 60% and 40%, respectively. Determine the break-even point in units of X and Y. If required, round answer to nearest whole number.

Accepted Answer

The answer of Bobby Company has fixed costs of $160,000....

Question 9

Currently, the unit selling price is $50, the variable cost is $34, and the total fixed costs are $108,000. A proposal is being evaluated to increase the selling price to $54.
(a)Compute the current break-even sales  (units).
(b)Compute the anticipated break-even sales  (units), assuming that the unit selling price is increased and all costs remain constant.

Accepted Answer

The answer of Currently, the unit selling price is $50,...

Question 10

A company has a margin of safety of 25%, a contribution margin ratio of 30%, and sales of $1,000,000.
(a)What is the break-even point in sales dollars?
(b)What is the operating income?
(c)If neither the relationship between variable costs and sales nor the amount of fixed costs is expected to change in the next year, how much additional operating income can be earned by increasing sales by $110,000?

Accepted Answer

The answer of A company has a margin of safety...

Question 11

A business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of $240,000, a break-even point of $960,000, and operating income of $60,000 for the current year. Calculate the current year's sales.

Accepted Answer

The answer of A business had a margin of safety...

Question 12

Perfect Stampers makes and sells aftermarket hub caps. The variable cost for each hub cap is $4.75, and the hub cap sells for $9.95. Perfect Stampers has fixed costs per month of $3,120. Compute the contribution margin per unit and break-even sales in units and in dollars for the month.

Accepted Answer

The answer of Perfect Stampers makes and sells aftermarket hub...

Question 13

Steven Company has fixed costs of $160,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below.?  The sales mix for products X and Y is 60% and 40%, respectively. Determine the break-even point in units of X and Y. If required, round answer to nearest whole number.

Accepted Answer

The answer of Steven Company has fixed costs of $160,000....

Question 14

Cordell, Inc. has an operating leverage of 3. Sales are expected to increase by 9% next year. What is the expected change in operating income next year?

Accepted Answer

The answer of Cordell, Inc. has an operating leverage of...

Question 15

Dean Company has sales of $500,000, and the break-even point in sales dollars is $300,000. Determine the company's margin of safety percentage. If required, round answer to nearest whole number.

Accepted Answer

The answer of Dean Company has sales of $500,000, and...

Question 16

Trail Bikes, Inc. sells three Deluxe bikes for every seven Standard bikes. The Deluxe bike sells for $1,800 and has variable costs of $1,200. The Standard bike sells for $600 and has variable costs of $200.?

Required
(a) If Trail Bikes has fixed costs that total $1,702,000, how many bikes must be sold in order for the company tobreak even?
(b) How many of these bikes will be Deluxe bikes, and how many will be Standard bikes?

Accepted Answer

The answer of Trail Bikes, Inc. sells three Deluxe bikes...

Question 17

Klein Company reports the following data:?
Sales$980,000
Variable costs500,000
Fixed costs350,000?
Determine Klein Company's operating leverage. Round answer to the nearest cent.

Accepted Answer

The answer of Klein Company reports the following data:?
Sales$980,000
Variable costs500,000
Fixed...

Question 18

For the current year ending April 30, Hal Company expects fixed costs of $60,000, a unit variable cost of $70, and anticipated break-even of 1,715 sales units.
(a)Compute the unit sales price.
(b)Compute the sales 
(units) required to realize an operating profit of $8,000.Round answer to the nearest whole number.

Accepted Answer

The answer of For the current year ending April 30,...

Question 19

Racer Industries has fixed costs of $900,000. Selling price per unit is $250, and variable cost per unit is $130.
Required
(a) How many units must Racer sell in order to break even?
(b) How many units must Racer sell in order to earn a profit of $480,000?
(c) A new employee suggests that Racer Industries sponsor a 10K marathon as a form of advertising. The cost tosponsor the event is $7,200. How many more units must be sold to cover this cost?

Accepted Answer

The answer of Racer Industries has fixed costs of $900,000....

Question 20

Safari Co. sells two products, orks and zins. Last year, Safari sold 21,000 units of orks and 14,000 units of zins. Related data are as follows:?  ?Calculate the following: 
a. Safari Co.'s sales mix
b. Safari Co.'s unit selling price of E
c. Safari Co.'s unit contribution margin of E
d. Safari Co.'s break-even point assuming that last year's fixed costs were $160,000

Accepted Answer

The answer of Safari Co. sells two products, orks and...

Quiz 21: Cost-Volume-Profit Analysis