Chapter 03 MC Homework
Tally Corp. sells softwares during the recruiting season. During the current year, 14,000 software packages were sold resulting in $470,000 of sales revenue, $130,000 of variable costs, and $52,000 of fixed costs. Contribution margin per software is ___.
$24.29
Lobster Liquidators will make $520,000 if the fishing season weather is good, $210,000 if the weather is fair, and probability of good weather, a 25% probability of fair weather, and a 30% probability of poor weather, what is the expected monetary value for Lobster Liquidators?
$271,500
Sparkle Jewelry sells 800 units resulting in $10,000 of sales revenue, $4,000 of variable costs, and $1,500 of fixed costs. Contribution margin per unit is ___.
$7.50
Tally Corp. sells software during the recruiting seasons. During the current year, 18,000 software packages were sold resulting in $450,000 of sales revenue, $120,000 of variable costs, and $54,000 of fixed costs. If sales increase by $100,000, operating income will increase by ___.
$73,320
Which of the following statements about net income (NI) is true?
NI = operating income less income taxes.
Which of the following is true of cost-volume-profit analysis?
The theory assumes that units manufactured equal units sold.
Sensitivity analysis is ___.
a way of determining what will happen if assumptions change
The margin of safety is the difference between ___.
budgeted revenues and break even revenues
The contribution margin income statement ___.
can be used to predict operating income at different levels of activity
Service companies and not-for-profit organizations ___.
can use CVPby focusing on measuring the organization's output
The selling price per unit less the variable cost per unit is the ___.
contribution margin per unit
Which of the following is the mathematical expression of contribution margin ratio?
contribution margin ratio = contribution margin percentage x revenues (in dollars)
The planned operating income is calculated by ___.
dividing net income by 1 - tax rate
Break even point in units is ___.
fixed costs divided by contribution margin per unit
One of the first steps to take when using CVP analysis to help make decisions is ___.
identifying the variable and fixed costs
Which of the following will increase a company's break even point?
increasing variable cost per unit
In a company with low operating leverage, ___.
less risk is assumed than in a highly leveraged firm
If a company is planning to reduce the selling price, they must believe that ___.
more units will be sold
Assume only the specified parameters change in a cost-volume-profit analysis. If the contribution margin increases by $6 per unit, then ___.
operating income increases by $6 per unit.
Assume only the specified parameters change in a cost-volume-profit analysis. If the contribution margin increases by $6 per unit, then ___.
operating income increases by $6 per unit
At break even point, ___.
operating income is equal to zero.
The break even point is the activity level where ___.
revenues equal the sum of variable and fixed costs
If unit outputs exceed the break even point ___.
there will be a profit
Managers use cost-volume-profit (CVP) analysis to ___.
to study the behavior of and relationship among the elements such as total revenues, total costs, and income.
Assume only the specified parameters change in a CVP analysis. The contribution margin percentage increases when ___.
variable costs per unit decrease