Ch 7 Managerial Accounting
The manager at Vertical Wire Productions reported total sales revenue of $800,000. The variable expenses were $600,000, and there were $125,000 of total fixed expenses. Use the contribution margin shortcut formula to predict the breakeven point in dollars.
$500,000
Daphne's Floral Service has a monthly target operating income of $30,000. Variable expenses are 15% of sales. The manager reported fixed expenses of $20,000. What is Daphne Floral's operating leverage factor at the target level of operating income?
1.67
________ expresses the relationships amongst costs, volume, and organizational profits.
CVP analysis
Which of the following refers to the excess of sales revenue over variable expenses?
Contribution margin
(Sales revenue × contribution margin ratio) - fixed costs represents which of the following?
Operating income
The horizontal x-axis on the CVP graph represents ________.
volume of units
Sam's Appliance Outlet has variable expenses of 40% of sales. The manager reported monthly fixed expenses of $240,000. The monthly target operating income is $80,000. What is the monthly margin of safety in dollars if the manager at Sam's Appliance Outlet achieves the operating income goal?
$133,333
Terry's Frame & Art Shoppe produces and sells picture frames to clients at $8.00 per picture frame. The variable cost to produce each picture frame is $3.25. The fixed costs are $3,000 per month. What is the firm's contribution margin per picture frame?
$4.75
Brandy's Balloon Service currently sells 1,000 balloon bundles per month. The competition in the balloon industry continues to soar within a thirty-mile vicinity of the service location. Variable expenses were $2.00 per balloon and fixed expenses were $5,000. If Brandy changes the price of balloon bundles to $10, how many balloon bundles should she sell to achieve her target operating income of $6,000?
1,375 balloon bundles
The Lampost Production Company has $6,000 of fixed expenses. The manager reported that the company's operating income wass $0, and the contribution margin was 40%. What are the company's sales in dollars using the shortcut approach to the contribution margin ratio?
15,000
Daphne's Planter Company produces and sells planters. The manager reported $10,500 in fixed expenses, operating income of $0 at the breakeven point, and a contribution margin per unit of $60. What is the company's breakeven point in units using the shortcut approach?
175 units
Terry's Frame & Art Shoppe produces and sells picture frames to clients at $8.00 per picture frame. The variable cost to produce each picture frame is $3.25 per picture frame. The fixed costs are $3,000 per month. What is the firm's contribution margin ratio?
59.37%
The Coffee Factory sells two products, supreme and mild. The supreme sells for $120 per case (unit) with variable costs of $90 per unit. The mild sells for $90 per unit with variable costs of $10 per unit. The manager reported $42,600 total fixed costs. The Coffee Factory usually sells three supreme brands for each two mild brands. What is the breakeven point in total units?
852 units
How might a change in fixed costs affect the contribution margin?
A change in fixed costs does not affect the contribution margin.
Which of the following statements is NOT true about sensitivity analysis?
A manager will NOT use CVP analysis to conduct sensitivity analysis.
Which step in the CVP graph indicates the breakeven point?
Step 4
Which of the following is NOT an approach to compute the breakeven point?
Zero income approach
The weighted-average contribution margin ________.
can be used for a company that sells more than one product
The ________ is computed as the total contribution margin divided by total sales.
contribution margin ratio
The ________ refers to a company's amount of relative fixed and variable costs.
operating leverage
The ________ is the excess of actual or expected sales over breakeven sales.
margin of safety
The ________ is the combination of products that make up total sales.
sales mix
