Chapter 5 Cost-Volume-Profit Relationships Learn Smart

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

Sales, variable expenses

Contribution margin:

becomes profit after fixed expenses are covered

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

Company A's product sells for $90 and has a variable cost of $35 per unit. Fixed costs total $550,000. If Company A sells 16,000 units, the contribution margin per unit is:

$55

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

CVP Analysis

Selling price per unit multiplied by the quantity sold equals total _____.

Sales

The contribution margin is equal to sales minus:

variable expenses

CVP Analysis allows companies to easily identify the change in profit due to changes in

volume, selling price, costs

Vivian's Violins has sales of $326,000, contribution margin of $184,000 and fixed costs total $85,000. Vivian's Violins net operating income is:

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