ACC 202: Chapter 5

After reach the break-even point, a company's net operating income will increase by the _____ per unit for each additional unit sold

contribution margin

If company has sale of $100,000, a contribution margin of $40,000 and a fixed expenses of $50,000.. the company has?

a $10,000 net operating loss

Contribution margin is first used to cover _____ expenses. Once the break-even point has been reached, contribution margin becomes _____.

fixed expenses, profit

Company A has sales of $500,000, variable costs of $350,000 and fixed costs of $150,000. Company A has?

reached the break-even point, contribution margin equal to fixed costs

Which of the following items are found above the contribution margin on a contribution margin format income statement?

sales, variable expenses

Profit = (selling price per unit x quantity sold) - (________ expense per unit x quantity sold) - _________expenses.

variable, fixed

An income statement constructed under the ____ approach allows users to easily judge the impact of profits of changes in selling price, cost or volume

contribution margin

Ceramic sells pots for $25. Variable cost per pot is $12, and 15,000 pots must be sold to break-even. Ceramic sells $25,000 pots. What is net operating income?

$130,000 (25,000-15,000)x($25-$12) = $130,000

Pearls sold 95 necklaces last month. VC per unit is $40, and fixed cost is $3,085. What is total variable cost?

$3,800

Pete sells putters for $125 each. Variable cost is $60 per putter and fixed costs totals $400,000. Based on this info: What will the sale of 12,000 putters result in net operating income? What is the contribution margin per putter?

$380,000 NOI CM: $65

Violin's sales of $326,000. Contribution margin of $184,000 and fixed costs total $85,000. What is net operating income?

$99,000 $184,000-$85,000=$99,000

Which tool can be used to calculate the change in profit resulting from a change in sales price, sales volume, variable costs or fixed costs?

CVP Analysis Cost Volume Profit Analysis

Which of the following tools may be used to calculate the volume of sales needed to cover a company's fixed expenses?

break-even

When a company sells one unit above the number required to break-even, the company's net operating income will

change from zero to a net operating profit

To calculate profit, multiple the ________ per unit by sales volume and subtract total fixed costs

contribution margin

Break-even point is reached when?

contribution margin is equal to total fixed costs/expenses

Once the break-even point has been reached, the sale of an additonal unit will lead to an increase in contribution margin that is ____ the increase in net operating income

equal to

If company has only a single product, total sales can be calculated using only:

sales price per unit x the number of units sold

selling price per unit x quantity sold =

total sales

Net operating income can be calculated as

(unit sales-unit sales to break even) x unit continuation margin

Which of the following must be subtracted from sales to reach the contribution margin?

All variable expenses like variable direct labor, variable selling and admin costs, variable overhead, variable direct materials

The contributed Margin is equal to?

Sales - Variable expenses = contributed margin

Trains is currently selling 55,000 toy trains for $50 per unit. Variable cost per train is $26 and total fixed costs are $110,000. If he sells an additional 5,000 trains, profit will

increase $120,000

Which of the following is needed to calculate profit

unit contribution margin, unit sales and total fixed costs

CVP analysis allows companies to easily identify changes in profit due to changes in?

volume, costs, selling price