ACCT ch 5 presentation
Future Corporation has a single product; the product selling price is $100 and variable costs are $60. The company's fixed expenses are $10,000. What is the company's break-even point in sales dollars?
25000 Dollar sales to break-even = Fixed expenses of $10,000 ÷ CM Ratio of 0.40 = $25,000.
Team Corporation has sales of $1 million, fixed expenses of $200,000, and variable expenses of $650,000 for the month of March. What is the contribution margin ratio of the company for the month of March?
35%
target profit in dollar equation
CM Ratio X sales - fixed expenses
change in contribution margin =
CM Ratio x Change in Sales
breakeven dollar equation
CM ratio x Sales - Fixed Expenses
Contribution Margin Ratio computes
Change in contribution margin for change in sales volume
What is usually plotted as a horizontal line on the CVP graph?
Fixed expenses
margin of safety as %
Margin of safety in dollars / total budgeted (or actual) sales in dollars
profit =
Unit Contribution Margin x Q - Fixed Expenses (CM ratio x Sales) - Fixed Expenses
CM Mixed producs=
Weighted average of the Percent for each product X Percent of sales
degree of operating leverage
contribution margin / net operating income
% change in Net operating income
degree of operating leverage X % change in sales
breakeven dollars fomula
fixed expenses / CM ratio
breakeven unit sales formula
fixed expenses / unit cm
breakeven equation
profit = unit cm x Q - fixed expenses
% change in sales
sales 1 - sales 2 / sales 1
target profit in units formula
target profit + fixed expenses / unit CM
target profit in dollar formula
target profit = fixed expenses / CM ratio
target profit in units equation
unit CM x Q - Fixed Expenses
Frank Corporation has a single product. Its selling price is $80 and the variable costs are $30. The company's fixed expenses are $5,000. What is the company's break-even point in unit sales?
100 Units
Winter Corporation's current sales are $500,000. The contribution margin is $300,000 and the net operating income is $100,000. What is the company's degree of operating leverage?
3.00
Contribution Margin Ratio =
Contribution Margin / Sales
Alpha Corporation is currently selling 500 skateboards per month. The unit selling price and variable expenses are $60 and $35 respectively. The fixed expenses amount to $5,000 per month. The company has an opportunity to make a bulk sale of 100 skateboards. This sale will not affect the company's regular sales or total fixed expenses. What unit price should be charged if the company is seeking a profit of $2,000 on the bulk sale?
$55
The current sales of Trent, Inc., are $400,000, with a contribution margin of $200,000. The company's degree of operating leverage is 2. If the company anticipates a 30% increase in sales, what is the percentage change in net operating income for Trent, Inc.?
60%
Base Corporation has sales of $100,000, variable costs of $40,000, and fixed costs of $30,000 currently. The company is expecting a $36,000 increase in sales. What is the change in contribution margin for the company?
$21,600
Contribution Margin =
Sales Revenue - Variable Expenses
What is represented on the X axis of a cost-volume-profit (CVP) graph?
Sales volume
margin of safety in dollars
Total budgeted (or actual) sales - break even sales
margin of safety in units
margin of safety in dollars / selling price
Cartier Corporation currently sells its products for $50 per unit. The company's variable costs are $20 per unit. Fixed expenses amount to a total of $5,000 per month. What is the company's variable cost ratio?
40%
The target profit is zero in break-even analysis
True
computation of the breakeven point
fixed expenses / overall CM ratio
CVP
cost volume profit