smart book 5

The contribution margin equals sales minus

all variable costs

Users can easily judge the impact on profits of changes in selling price, cost or volume when using an income statement constructed under the ______ approach.

contributauon

CVP is the acronym for

cost-volume-profit

CVP analysis allows companies to easily identify the change in profit due to changes in ______.

costs volume selling price

Contribution margin ______.

becomes profit after fixed expenses are covered

The contribution margin income statement allows users to easily judge the impact of a change in ______ on profit.

volume selling price cost

Daisy's Dolls sold 30,000 dolls this year for $40 each. Each doll's variable cost was $19. If Daisy incurred $250,000 of fixed expenses, net operating income for the year is

380000

To calculate the effect on profits of a planned increase in sales, you need the increase in units sold, any change in fixed costs and the

contribution margin per unit

According to the CVP analysis model and assuming all else remains the same, profits would be increased by a(n

decrease in the unit variable cost

True or false: Simple CVP analysis can be relied on for changes in volume outside the relevant range.

f

Total contribution margin equals ______.

fixed expenses plus net operating income

The contribution margin statement is ordinarily used by those ______.

inside the company only

The contribution margin statement is primarily used for ______.

internal decision making

CVP analysis focuses on how profits are affected by ______.

mix of products sold total fixed costs unit variable cost sales volume selling price

If the total contribution margin is less than the total fixed expenses, a ______ occurs.

net loss

To simplify CVP calculations, it is assumed that ______ will remain constant.

selling price

The contribution margin is equal to sales minus

variable expenses

Which of the following are assumptions of cost-volume-profit analysis?

- In multi product companies, the sales mix is constant. - Costs are linear and can be accurately divided into variable and fixed elements.

CVP analysis is based on some

Assumptions

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