MBUS 300: analysis of cost, volume, and pricing increase profitability SB
The point at which contribution margin equals total fixed cost is called the midpoint. break-even point. contribution margin point. minimum point.
break-even point
If the contribution margin ratio is 0.20 and fixed costs total $2,000, what is the break-even point in dollars? 9,000 10,000 400 2,000
10,000 Reason: Break-even point in dollars = Fixed costs/Contribution margin ratio $2,000/.20=10,000 dollars
The sales price of a product is $100 per unit; the variable cost is $20 per unit; and fixed costs total $800. How many units must be sold to break even? 80 8 10 100
10 Sales-Variable costs-Fixed costs=Profit $100N-$20N-$800=$0 $80N=$800 N=$800/$80 N=10 units
If the contribution margin per unit is $2 and fixed costs total $1,000, how many units must be sold to break even? 10 1000 500 100
500 Reason: Break-even point in units= Fixed costs/Contribution margin per unit $1,000/$2=500 units
Assume the sales price is $10 per unit, variable cost is $5 per unit, and fixed cost is $2,000. How would the break-even point in units change if the variable cost increased to $8 per unit? Increase by 400 units Increase by 1,000 units Increase by 600 units.
Increase by 600 units. Breakeven = Fixed Cost / (Sales Price per unit - Variable Cost per unit) Breakeven when variable cost is $5 = 1,000 units Breakeven when variable cost is $2 = 400 units 600 unit increase
The point at which profit equals zero is called the minimum point. break-even point. mid-point. zero point.
break-even point.
Increasing fixed costs will increase the number of units necessary to earn a desired profit. decrease the number of units necessary to earn a desired profit. have no effect on the number of units necessary to earn a desired profit.
increase the number of units necessary to earn a desired profit.
Cost-plus pricing is a strategy where the sales price is determined by what the market is willing to pay. marking up the variable cost. marking up the fixed cost.
marking up the variable cost.
Charging a premium price for a new product or renowned brand name is target pricing. prestige pricing. cost-plus pricing.
prestige pricing.
Reducing fixed costs will reduce the number of units necessary to earn a desired profit. increase the number of units necessary to earn a desired profit. have no effect on the number of units necessary to earn a desired profit.
reduce the number of units necessary to earn a desired profit.
Determining the sales price by determining what the market is willing to pay is target costing strategy. cost-plus pricing strategy. fixed pricing strategy.
target costing strategy.
If the contribution margin per unit is $200 and fixed costs total $1,000, how many units must be sold to earn a profit of $1,000? 50 5 10 100
10 Sales volume in units= Fixed costs+Desired profit/Contribution margin per unit ($1,000+$1,000)/$200= 10 units
If the sales price of a product is $10 per unit; the variable cost is $5 per unit; and fixed costs total $1,000, how many units must be sold to earn a profit of $1,000? 600 400 200 2,000
400 Sales-Variables costs-Fixed costs=Profit $10N-$5N-$1,000=$1,000 $5N=$1,000+$1,000 N=$2,000/$5 N=400 units
Determining the sales price by marking up the variable cost is Prestige pricing Fixed costing Target costing Cost-plus pricing
Cost-plus pricing
Assume the sales price is $10 per unit, variable cost is $5 per unit, and fixed cost is $1,000. How would the break-even point in units change if the variable cost increased to $8 per unit? Increase by 500 units Increase by 300 units Increase by 200 units
Increase by 300 units
The break-even point is the point where: (Select all that apply.) revenue equals total variable costs. revenue equals total fixed costs. profit equals zero. contribution margin equals total variable costs. contribution margin equals total fixed costs.
profit equals zero. contribution margin equals total fixed costs.
If you are unable to sell enough units to earn your desired profit, which of the following would help? increase fixed costs reduce fixed costs reduce variable costs increase variable costs
reduce fixed costs
Target costing is a strategy where the sales price is determined by marking up the fixed cost. marking up the variable cost. what the market is willing to pay.
what the market is willing to pay.
If the contribution margin is $40,000 and sales are $100,000 what is the contribution margin ratio? .40 .50 .30 2.5
.40 Reason: Contribution Margin Ratio = Contribution Margin/Sales $40,000/100,000 =.40
If the contribution margin is $80,000 and sales are $120,000 what is the contribution margin ratio? 0.76 0.80 1.5 0.67
.67 Contribution Margin Ratio = Contribution Margin/Sales $80,000/$120,000 =.66667
Calculate contribution margin per unit assuming sales price is $15 per unit and variable cost is $15 per unit. 21 6 0 9 15
0 Reason: Contribution Margin per unit = Sales Price per unit - Variable cost per unit.
Customers are sometimes willing to pay a premium price for the right to use a new product first. a prestigious brand name. a product in low demand.
the right to use a new product first. a prestigious brand name.
How does increasing fixed cost affect the break-even point? Increases the number of units to break-even Has no affect on the break-even point Decreases the number of units to break-even
Increases the number of units to break-even
How does reducing fixed cost affect the break-even point? Increases the number of units to break-even Reduces the number of units to break-even Has no affect on the break-even point
Reduces the number of units to break-even
If the contribution margin is $80,000 and sales are $120,000 what is the contribution margin ratio? 0.76 1.5 0.80 0.67
0.67 Reason: Contribution Margin Ratio = Contribution Margin/Sales $80,000/$120,000 =.66667
The sales price of a product is $2 per unit; the variable cost is $1 per unit; and fixed costs total $1,000. How many units must be sold to break even? 750 2,000 1,000 500
1,000 Reason: Sales-Variable costs-Fixed costs=Profit $2N-$1N-$1,000=$0 $1N=$1,000 N=$1,000/$1 N=1,000 units
If the contribution margin per unit is $1 and fixed costs total $1,000, how many units must be sold to break even? 100 1,000 500 10
1000 Break-even point in units= Fixed costs/Contribution margin per unit $1,000/$1=1,000 units
If the sales price of a product is $10 per unit; the variable cost is $9 per unit; and fixed costs total $10,000, how many units must be sold to earn a profit of $10,000? 20,000 10,500 10,000 10,200
20,000 Reason: Sales-Variables costs-Fixed costs=Profit $10N-$9N-$10,000=$10,000 $1N=$10,000+$10,000 N=$20,000/$1 N=20,000 units
The sales price of a product is $10 per unit; the variable cost is $5 per unit; and fixed costs total $1,000. How many units must be sold to break even? 200 300 100 1,000
200 Sales-Variable costs-Fixed costs=Profit $10N-$5N-$1,000=$0 $5N=$1,000 N=$1,000/$5 N=200 units
If the sales price of a product is $10 per unit; the variable cost is $5 per unit; and fixed costs total $1,000, how many units must be sold to earn a profit of $5? 1 5 201 205
201 Reason: Sales-Variables costs-Fixed costs=Profit $10N-$5N-$1,000=$5 $5N=$1,000+$5 N=$1,005/$5 N=201 units
If the contribution margin ratio is 0.25 and fixed costs total $1,000, what is the break-even point in dollars? 1,000 250 4,000 5,000
4000 Break-even point in dollars = Fixed costs/Contribution margin ratio $1,000/.25=4000 dollars
If the contribution margin per unit is $200 and fixed costs total $1,000, how many units must be sold to break even? 100 10 50 5
5 Reason: Break-even point in units= Fixed costs/Contribution margin per unit $1,000/$200=5 units
If the contribution margin per unit is $2 and fixed costs total $0, how many units must be sold to earn a profit of $100? 98 50 0 100
50 Sales volume in units= Fixed costs+Desired profit/Contribution margin per unit ($0+$100)/$2= 50 units
Calculate contribution margin per unit assuming sales price is $15 per unit and variable cost is $9 per unit. 6 15 9 21 0
6 Reason: Contribution Margin per unit = Sales Price per unit - Variable cost per unit.