Exam 2: Managerial Accounting

60%

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 contribution margin ratio?

12,000

Atlas Corporation sells 100 bicycles during a month. The contribution margin per bicycle is $200. The monthly fixed expenses are $8,000. What is the profit from the sale of 100 bicycles?

decrease

A shift in the sales mix from high-margin items to low-margin items can cause total profit to ________.

200

Atlas Corporation sells 100 bicycles during a month at a price of $500 per unit. The variable expenses amount to $300 per bicycle. How much does profit increase if it sells one more bicycle?

total revenue equals total costs

Break-even point is the level of sales at which ______.

Unit Contribution Margin

Once the break-even point has been reached, net operating income will increase by the amount of the _____ for each additional unit sold.

increase of 14,200

Taylor Company has current sales of 1,000 units, which generates sales revenue of $190,000, variable costs of $76,000, and fixed expenses of $96,000. The company believes sales will increase by 300 units, if advertising increases by $20,000. What is the change in net operating income after the changes?

Operating Leverage

The measure of how sensitive net operating income is to a given percentage change in volume sales is called _______.

Profit= (Unit CM X Q) - Fixed Expenses

The profit graph is based on the following linear equation:

100 units

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?

sales minus variable cost

Contribution margin equals ________.

40%

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?

25000

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?