Question 1

Examining strategies that impact several estimates in the CVP analysis is known as ______________________.

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Question 2

The difference between the unit sales price and the unit variable cost of an item is defined as the ________________________.

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The answer of The difference between the unit sales price...

Question 3

Bristol Company's contribution margin income statement is presented below. Sales for the current period consisted of 7,500 units. Compute the company's break-even point in (a) units, and (b) dollars. Compute the margin of safety in (c) dollars and (d) percent.

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The answer of Bristol Company's contribution margin income statement is...

Question 4

Three important assumptions in cost-volume-profit analysis is that (1) _______________ per unit is constant, (2) _____________ per unit is constant, and (3) ______________ are constant in total.

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The answer of Three important assumptions in cost-volume-profit analysis is...

Question 5

A _______________ cost is one that remains unchanged in amount when volume of activity varies from period to period within a relevant range. A ______________ cost is one that changes in proportion to changes in volume of activity.

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The answer of A _______________ cost is one that remains...

Question 6

The sales mix of Palm Company is 5 units of A, 3 units of B, and 1 unit of
C. Per unit sales prices for each product are $30, $40, and $50, respectively. Variable costs per unit are $14, $24, and $34, respectively. Fixed costs are $597,600. What is the break-even point in composite units and in units of A, B, and C?

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The answer of The sales mix of Palm Company is...

Question 7

There are at least three different methods to separate costs into fixed and variable. These methods are the ______________, ______________, and _______________ methods.

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The answer of There are at least three different methods...

Question 8

Wilton Company is analyzing two alternative methods of producing its product. The production manager indicates that variable costs can be reduced 40% by installing a machine that automates production, but fixed costs would increase. Alternative 1 shows costs before installing the machine; Alternative 2 shows costs after the machine is installed. (a) Compute the break-even point in units and dollars for both alternatives. (b) Prepare a forecasted income statement for both alternatives assuming that 30,000 units will be sold. The statements should report sales, total variable costs, contribution margin, fixed costs, income before taxes, income taxes, and net income. Below the income statement, compute the degree of operating leverage. Which alternative would you recommend and why?

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Question 9

The unit contribution margin divided by the selling price per unit is the ___________________.

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Question 10

Spruce Company is considering the production and sale of a new product with the following sales and cost data: unit sales price, $350; unit variable costs, $180; total fixed costs, $399,500; and projected sales, $910,000. Round your answers to the nearest whole unit or dollar.
(a) Calculate break-even in units.
(b) Calculate break-even in dollars (use four decimal places when calculating the contribution margin ratio).
(c) Calculate number of units that would need to be sold to generate an after-tax profit of $420,000 assuming a 30% tax rate.
(d) Calculate dollar sales that would be needed to generate the same profit as above.
(e) Calculate the margin of safety stated as a percentage using the $910,000 projected sales level.
Be sure to label each calculation and show all calculations.

Accepted Answer

The answer of Spruce Company is considering the production and...

Question 11

Joseph Co. has three products A, B, and C, and its fixed costs are $69,000. The sales mix for its products are 3 units of A, 4 units of B, and 1 unit of
C. Information about the three products follows:
  (a) Calculate the company's break-even point in composite units and sales dollars.
(b) Calculate the number of units of each individual product to be sold at the break-even point.

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Question 12

Identify items a, b, and c in the cost-volume-profit graph shown below.

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Question 13

Wilson Co. is preparing next period's forecasts. Total fixed costs are expected to be $300,000 and the contribution margin ratio is expected to be 30%. The applicable income tax rate is 25%.
(a) Calculate the company's break-even point in dollar sales.
(b) If sales are $1,800,000 above the break-even point, what will income be (i) pretax income and (ii) after-tax income?

Accepted Answer

The answer of Wilson Co. is preparing next period's forecasts....

Question 14

The following information describes a product expected to be produced and sold by Hadley Company:  Required:
(a) Calculate the contribution margin ratio.
(b) Calculate the break-even point in dollar sales.
(c) What dollar amount of sales would be necessary to achieve a pretax income of $120,000?

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The answer of The following information describes a product expected...

Question 15

A __________ cost is one that includes both fixed and variable cost components; a ______________ cost is one that reflects a step pattern.

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Question 16

A firm sells two different products, A and
A. Total fixed costs for this firm are $1,260,000. Additional selling prices and cost information for both products follow:
  Required: (a) Calculate the contribution margin per composite unit.
(b) Calculate the break-even point in units of each individual product.
(c) If pretax income before taxes of $294,000 is desired, how many units of A and B must be sold? 
B. For each unit of B, the firm sells two units of

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The answer of A firm sells two different products, A...

Question 17

Solving problems to determine the relationship of cost, volume, and profit often commences with the measurement of the _____________ point. Further analysis emphasizing profitability may be accomplished by measuring the _______________ and ________________.

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The answer of Solving problems to determine the relationship of...

Question 18

Magee Windows manufactures two standard size windows, F and M, in the ratio of 5:3. F has a selling price of $150 and M has a selling price of $200. The variable cost of F is $75.00 and the variable cost of M is $90.00. Fixed costs are $352,500. Compute the (a) weighted average contribution margin, (b) break-even point in units, (c) number of units of each product that will be sold at the break-even point.

Accepted Answer

The answer of Magee Windows manufactures two standard size windows,...

Question 19

Thomas Co. produces and sells Ultra, Super, and Mega, and has total fixed costs of $52,000. Sales and cost data follow:  Calculate the break-even point in composite units.

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The answer of Thomas Co. produces and sells Ultra, Super,...

Question 20

Browning Company sells a mix of three related products. Total fixed costs are $144,000. The following additional information is available for Browning Company.  Use the weighted average method to determine the company's break-even point for composite units.

Accepted Answer

The answer of Browning Company sells a mix of three...

Quiz 22: Cost-Volume-Profit Analysis

Examining strategies that impact several estimates in the CVP analysis is known as ______________________.

The difference between the unit sales price and the unit variable cost of an item is defined as the ________________________.

Bristol Company's contribution margin income statement is presented below. Sales for the current period consisted of 7,500 units. Compute the company's break-even point in (a) units, and (b) dollars. Compute the margin of safety in (c) dollars and (d) percent.

Three important assumptions in cost-volume-profit analysis is that (1) _________ per unit is constant, (2) _ per unit is constant, and (3) ________ are constant in total.

A _ cost is one that remains unchanged in amount when volume of activity varies from period to period within a relevant range. A cost is one that changes in proportion to changes in volume of activity.

There are at least three different methods to separate costs into fixed and variable. These methods are the , , and ___ methods.

The unit contribution margin divided by the selling price per unit is the ___________________.

Identify items a, b, and c in the cost-volume-profit graph shown below.

The following information describes a product expected to be produced and sold by Hadley Company: Required: (a) Calculate the contribution margin ratio. (b) Calculate the break-even point in dollar sales. (c) What dollar amount of sales would be necessary to achieve a pretax income of $120,000?

A cost is one that includes both fixed and variable cost components; a ____ cost is one that reflects a step pattern.

Solving problems to determine the relationship of cost, volume, and profit often commences with the measurement of the _____ point. Further analysis emphasizing profitability may be accomplished by measuring the _ and __________.

Thomas Co. produces and sells Ultra, Super, and Mega, and has total fixed costs of $52,000. Sales and cost data follow: Calculate the break-even point in composite units.

Browning Company sells a mix of three related products. Total fixed costs are $144,000. The following additional information is available for Browning Company. Use the weighted average method to determine the company's break-even point for composite units.