Question 1

Company A makes and sells a single product,unless otherwise indicated.What happens to the break-even point when total fixed costs increase?

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Question 2

How does an increase in variable costs affect the break-even point in sales dollars?

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Question 3

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.

Accepted Answer

This is true. The break-even point calculation requires an assumption about the sales mix because the contribution margin for each product may differ, and the overall contribution margin will depend on the proportion of each product sold.

Question 4

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)

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Question 5

Can cost-volume-profit analysis be useful for a company that sells more than one product? If so,how? If not,why not?

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The answer of Can cost-volume-profit analysis be useful for a...

Question 6

For a company that sells several products,cost-volume-profit techniques cannot be used to calculate the sales volume required to yield a target level of profit.

Accepted Answer

Cost-volume-profit techniques can be used to calculate the sales volume required to yield a target level of profit for a company that sells several products. However, it may be more complex as the company would need to calculate the contribution margin for each product and determine the sales mix.

Question 7

What is prestige pricing? Under what circumstances should a company consider using prestige pricing?

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Question 8

Explain how to calculate contribution margin per unit.

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Question 9

How would a company use target pricing to identify the desired cost for a product or service?

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Question 10

Taylor Mayberry is sales manager for a specialty products company that has over 100 product lines.The company uses twenty-five vendors and competes with dozens of competitors.It has been the company's practice to match competitor prices on the products it sells.Describe a technique that will assist Taylor in assessing the impact of constantly changing purchase costs,selling prices,and volumes.

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Question 11

If you were drawing a cost-volume-profit graph for a company,what lines would you plot on the graph?

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Question 12

What does the margin of safety measure?

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The answer of What does the margin of safety measure?...

Question 13

How can contribution margin per unit be used to find the break-even point in units?

Accepted Answer

The answer of How can contribution margin per unit be...

Question 14

Company A makes and sells a single product,unless otherwise indicated.What happens to break-even point when the variable cost per unit and selling price both decrease by the same amount?

Accepted Answer

The answer of Company A makes and sells a single...

Question 15

How can the contribution margin ratio be used in cost-volume-profit analysis?

Accepted Answer

The answer of How can the contribution margin ratio be...

Question 16

Company A makes and sells a single product,unless otherwise indicated.What happens to the break-even point when variable cost per unit increases and total fixed costs decrease?

Accepted Answer

The answer of Company A makes and sells a single...

Question 17

What are the assumptions on which cost-volume-profit analysis is based? Are there any additional assumptions for a multiproduct company?

Accepted Answer

The answer of What are the assumptions on which cost-volume-profit...

Question 18

Gamble Company has contribution margin of $20 per unit and a break-even point of 10,000 units.If Gamble sells 9,999 units,what would be its net income or loss? Explain how you calculated your answer.

Accepted Answer

The answer of Gamble Company has contribution margin of $20...

Question 19

What is the break-even point for a company?

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The answer of What is the break-even point for a...

Question 20

Compare and contrast a cost-plus pricing strategy to a target pricing strategy.

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

Company A makes and sells a single product,unless otherwise indicated.What happens to the break-even point when total fixed costs increase?

How does an increase in variable costs affect the break-even point in sales dollars?

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.

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)

Can cost-volume-profit analysis be useful for a company that sells more than one product? If so,how? If not,why not?

For a company that sells several products,cost-volume-profit techniques cannot be used to calculate the sales volume required to yield a target level of profit.

What is prestige pricing? Under what circumstances should a company consider using prestige pricing?

Explain how to calculate contribution margin per unit.

How would a company use target pricing to identify the desired cost for a product or service?

If you were drawing a cost-volume-profit graph for a company,what lines would you plot on the graph?

What does the margin of safety measure?

How can contribution margin per unit be used to find the break-even point in units?

Company A makes and sells a single product,unless otherwise indicated.What happens to break-even point when the variable cost per unit and selling price both decrease by the same amount?

How can the contribution margin ratio be used in cost-volume-profit analysis?

Company A makes and sells a single product,unless otherwise indicated.What happens to the break-even point when variable cost per unit increases and total fixed costs decrease?

What are the assumptions on which cost-volume-profit analysis is based? Are there any additional assumptions for a multiproduct company?

Gamble Company has contribution margin of $20 per unit and a break-even point of 10,000 units.If Gamble sells 9,999 units,what would be its net income or loss? Explain how you calculated your answer.

What is the break-even point for a company?

Compare and contrast a cost-plus pricing strategy to a target pricing strategy.