Accounting 2020 Ch 6

Solving for the sales level needed to attain a target profit of $______ is the same process as solving for the sales level needed to break-even.

$0

Orange You Going to Smile? sells oranges for $20 per crate. If the company's margin of safety is $180.000, the margin of safety in units is ______crates.

180,000 / 20 = 9,000

The relative proportions in which a company's products are sold is referred to as _______ ______.

sales mix

In the equation, Y = a (x) bX, X represents the:

total mixed cost

Lane, Inc. has sales of 9,000 units. The contribution margin per unit is $32 and fixed costs total $120,000. Lance's profit is $_____.

(9,000 X $32) - $120,000 = $168,000

Which of the following statements are true?

- Plotting data on a scattergraph is an important diagnostic step. - Scattergraphs are a way to diagnose cost behavior

Pete's Putters sells each putter for $125. The variable cost is $60 per putter and fixed costs total $400,000. Based on this information:

- The contribution margin per putter is $65 - The sale of 12,000 putters results in net operating income of $380,000.

In the equation, Y = a x bX, a represents the:

- Vertical intercept of the line -Total fixed cost

In the equation, Y = a x bX, B represents the:

- slope of the line - variable cost per unit of activity

Candle Central has $1,440 of total variable expense for a sales level of 600 units and $2,160 of total variable expense for a sales level of 900 units. If Candle Central sells 500 units:

- the variable cost per unit is $2.40 - total variable cost is %$1,200

Using the high-low method, the fixed cost is calculated

-Using either the high or low level of activity - After the variable cost per unit is calculated

The break-even point calculation is affected by:

-costs per unit -selling price per unit -Sales mix

Company A has fixed costs of $564,000 and a contribution margin of 62%. Sales dollars to break-even rounded to the nearest whole dollar equals:

564,000 / .62 = $909,677

A company needs to sell 90,000 units to reach the target profit of $180,000. If each unit sells for $7.50, the total sales dollars needed to reach the target profit is $________.

90,000 x 7.50 = 675,000

Cakes by Jacki has $144,000 of fixed costs per year. The contribution margin ratio is 59%. The sales dollars to break-even rounded to the nearest dollar equals:

Sales = $144,000 / 0.59 = $244,068

Sniffles, Inc. produces facial tissues. The company's contribution margin ratio is 77%. Fixed expenses are $240,000. To achieve a target profit of $930,000, Sniffles' sales rounded to the nearest dollar must be:

Sales = ($240,400 + $930,000) / 0.77 = $1,520,000

Company A has fixed costs of $564,000 and wishes to earn a profit of $800,000 this year. If Company A has a contribution margin ratio of 62%, sales dollars needed to reach the target profit equals:

Sales = (564,000 + 800,000) / .62 = $2,200,000

Blissful Blankets' target profit is $520,000. Each blanket has a contribution margin of $21. Fixed costs are $320,000. The number of blankets Blissful Blankets need to sell in order to achieve its target profit is:

Sales Volume = (520,000 + 320,000) / 21 = 40,000 blankets

Paula's Perfumes has a target profit of $4,000 per month. Perfume sells for $15.00 per bottle and variable costs are $13.50 per bottle. Fixed costs are $3,200 per month. The number of bottles that must be sold each month to earn the target profit is:

Sales Volume= (4000+3200) / (15.00-13.50) = 4,800 bottles

A company's selling price is $90 per unit, variable cost per unit is $28 and total fixed expenses are $320,000. The number of unit sales needed to earn a target profit of $200,800 is:

Sales volume= ($320,000 + $200,800) / ($90 - $28) =8,400 Units

Shonda's Shoes sell for $95 per pair. If Shonda must sell 284 pairs of shoes to break-even, sales dollars needed to break-even equals $______

Total Sales= 95 x 284 = $26,980

JVL Enterprises has set a target profit of $126,000, The company sells a single product for $50 per unit. Variable costs are $15 per unit and fixed costs total $98,000. How many units does JVL have to sell to BREAK-EVEN?

Units Needed = 98,000 / (50-15) 2800 Units Needed

Plush & Cushy sells high-end desk-chairs. The variable expense per chair is $85.05 and the chairs sell for $189.00 each. The variable expense ratio for Plush & Cushy's chairs is _________%.

Variable expenses = 85.05 / 189 = 45%

A method that uses all the available data points to divide a mixed cost into its fixed and variable components is called:

least-squares regression

A measure of how sensitive net operating income is to a given percentage change is sales dollars is known as operating ______.

leverage