Chapter 03 MC Homework

Tally Corp. sells softwares during the recruiting season. During the current year, 14,000 software packages were sold resulting in $470,000 of sales revenue, $130,000 of variable costs, and $52,000 of fixed costs. Contribution margin per software is ___.

$24.29

Lobster Liquidators will make $520,000 if the fishing season weather is good, $210,000 if the weather is fair, and probability of good weather, a 25% probability of fair weather, and a 30% probability of poor weather, what is the expected monetary value for Lobster Liquidators?

$271,500

Sparkle Jewelry sells 800 units resulting in $10,000 of sales revenue, $4,000 of variable costs, and $1,500 of fixed costs. Contribution margin per unit is ___.

$7.50

Tally Corp. sells software during the recruiting seasons. During the current year, 18,000 software packages were sold resulting in $450,000 of sales revenue, $120,000 of variable costs, and $54,000 of fixed costs. If sales increase by $100,000, operating income will increase by ___.

$73,320

Which of the following statements about net income​ (NI) is​ true?

NI​ = operating income less income taxes.

Which of the following is true of cost-volume-profit ​analysis?

The theory assumes that units manufactured equal units sold.

Sensitivity analysis is ___.

a way of determining what will happen if assumptions change

The margin of safety is the difference between​ ___.

budgeted revenues and break even revenues

The contribution margin income statement ___.

can be used to predict operating income at different levels of activity

Service companies and not-for-profit organizations ___.

can use CVPby focusing on measuring the organization's output

The selling price per unit less the variable cost per unit is the ___.

contribution margin per unit

Which of the following is the mathematical expression of contribution margin ratio?

contribution margin ratio = contribution margin percentage x revenues (in dollars)

The planned operating income is calculated by​ ___.

dividing net income by 1 - tax rate

Break even point in units is ___.

fixed costs divided by contribution margin per unit

One of the first steps to take when using CVP analysis to help make decisions is ___.

identifying the variable and fixed costs

Which of the following will increase a​ company's break even​ point?

increasing variable cost per unit

In a company with low operating​ leverage, ___.

less risk is assumed than in a highly leveraged firm

If a company is planning to reduce the selling price, they must believe that ___.

more units will be sold

Assume only the specified parameters change in a cost-volume-profit analysis. If the contribution margin increases by $6 per unit, then ___.

operating income increases by $6 per unit.

Assume only the specified parameters change in a cost-volume-profit analysis. If the contribution margin increases by​ $6 per​ unit, then​ ___.

operating income increases by​ $6 per unit

At break even point, ___.

operating income is equal to zero.

The break even point is the activity level where ___.

revenues equal the sum of variable and fixed costs

If unit outputs exceed the break even point​ ___.

there will be a profit

Managers use cost-volume-profit (CVP) analysis to ___.

to study the behavior of and relationship among the elements such as total revenues, total costs, and income.

Assume only the specified parameters change in a CVP analysis. The contribution margin percentage increases when ___.

variable costs per unit decrease