CH 5
Given sales of $100,000 a contribution margin of $40,000, and fixed expenses of $50,000, the result is a Blank______.
$10,000 net operating loss
Ceramic Creations sells pots for $25. The variable cost per pot is $12 and 15,000 pots must be sold to break-even. If Ceramic Creations sells 25,000 pots, net operating income will be:
$130,000= (25000-15000) x (25-12)
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
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=1,440,000-560,000=880000/16000
Net operating income equals:
(unit sales - unit sales to break even) × unit contribution margin.
Which of the following are assumptions of cost-volume-profit analysis?
-Costs are linear and can be accurately divided into variable and fixed elements. -In multi product companies, the sales mix is constant
A company with a high ratio of fixed costs:
-is more likely to experience greater profits when sales are up than a company with mostly variable costs. -is more likely to experience a loss when sales are down than a company with mostly variable costs.
Daisy's Dolls sold 30,000 dolls this year. Each doll sold for $40 and had a variable cost of $19. Fixed expenses were $250,000. Net operating income for the year is Blank______.
380,000: Profit=(Sales-Variable Cost)-Fixed Cost
CVP is the acronym for
Cost-Volume-Profit
True or false: CVP analysis investigates company personnel policies, business values, and performance measures for a specific company
False
To simplify CVP calculations, it is assumed that Blank______ will remain constant.
Selling Price
Contribution margin:
becomes profit after fixed expenses are covered.
When a company sells one unit above the number required to break-even, the company's net operating income will ______.
change from zero to a net operating profit
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.
CVP analysis focuses on how profits are affected by ______.
mix of products sold total fixed costs selling price unit variable cost sales volume
The contribution margin income statement allows users to easily judge the impact of a change in ______ on profit.
selling price cost volume
The break-even point is reached when the contribution margin is equal to:
total fixed expenses.
When preparing a CVP graph, the horizontal axis represents:
unit volume
The contribution margin equals sales minus all Blank______ expenses.
variable