Managerial Accounting

Marjorie's Mugs sold 300 mugs last year for $20 each. Variable costs were $7 per mug and total fixed costs were $1,700. Marjorie's Mugs' profit was:

$2,200

Given a sales price of $100, variable costs of $70 and a break-even point of 500 units, net operating profit for sale of 501 units will be

$30

JVL Enterprises has set a target profit of $126,000. The company sells a single product for $50 per unit. Variable costs are $15 per unit and fixed costs total $98,000. How many units does JVL have to sell to BREAK-EVEN?

2,800

Given sales of $1,452,000, variable expenses of $958,320 and fixed expenses of $354,000, the contribution margin ratio is:

34%

Profit equals:

(P x Q) - (V x Q) - fixed expenses

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

Blank 1: fixed Blank 2: profit or income

The term "cost structure" refers to the relative proportion of _____ and ______ costs in an organization.

Blank 1: variable Blank 2: fixed

True or false: Cost structure refers to the relative portion of product and period costs in an organization.

False

The amount by which sales can drop before losses are incurred is the

Margin of Safety

Which of the following statements is correct?

The higher the margin of safety, the lower the risk of incurring a loss.

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

Variable expenses Sales

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

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

The contribution margin equals sales minus:

all variable costs

When constructing a CVP graph, the vertical axis represents

dollars

The relative proportions in which a company's products are sold is referred to as

sales mix

The term used for the relative proportion in which a company's products are sold is:

sales mix

When preparing a CVP graph, the horizontal axis represents

sales volume

Place the following items in the correct order in which they appear on the contribution margin format income statement.

1. Sales 2. Variable Expenses 3. Contribution margin 4. Fixed Expenses 5. Net Operating Income

Gifts Galore had $189,000 of Sales Revenue from wrapping paper sales last year. Total contribution margin was $100,170 and total fixed expenses were $27,500. The contribution margin ratio was:

53%

A company has a target profit of $204,000. The company's fixed costs are $305,000. The contribution margin per unit is $40. What is the BREAK-EVEN point in unit sales?

7,625 units

A company's selling price is $90 per unit, variable cost per unit is $28 and total fixed expenses are $320,000. The number of unit sales needed to earn a target profit of $200,800 is:

8,400

Contribution margin ratio is equal to ________ divided by

Blank 1: contribution Blank 2: margin Blank 3: sales or revenue

The degree of operating leverage =

Contribution margin/Net operating income

The calculation of contribution margin (CM) ratio is:

contribution margin/sales

The measure of how a percentage change in sales affects profits at any given level of sales is the:

degree of operating leverage

When preparing a CVP graph, the horizontal axis represents:

sales volume

To prepare a CVP graph, lines must be drawn representing total revenue,

total expense, and total fixed expense

Blissful Blankets' target profit is $520,000. Each blanket has a contribution margin of $21. Fixed costs are $320,000. The number of blankets Blissful Blankets need to sell in order to achieve its target profit is:

40,000 Reason: $520,000 = $21 x Q - $320,000; $520,000 + 320,000 = $21xQ; $840,000/$21 = 40,000 blankets

Total contribution margin equals:

fixed expenses plus net operating income