Accounting 202 - SB 6

A company sells 15,000 units of product per month. The sales price per unit is $5.00, variable costs are $2.80 per unit and and total fixed costs equal $3,000. The contribution margin ratio is Blank______. Multiple choice question. 56% 44% 52% 40%

44% Reason: ($5.00 - $2.80) ÷ $5.00 = 44%

Given sales of 10,000 units per month, sales price per unit of $4.00, variable costs of $1.80 per unit and and total fixed costs of $5,000, the contribution margin ratio is

Blank 1: 55

A company sells two products. Product A sales total $28,000 and Product B sales total $12,000. Total contribution margin is $18,000 for Product A and $9,000 for Product B. The weighted average contribution margin ratio is _______%

Blank 1: 67.5 (18,000+9,000)/(28,000+12,000) = 27,000/40,000 = 0.675 x 100 = 67.5%

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? Cost structure Target profit analysis CVP analysis Degree of operating leverage

CVP analysis

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? Multiple choice question. Cost structure Target profit analysis CVP analysis Degree of operating leverage

CVP analysis

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? Multiple choice question. Degree of operating leverage CVP analysis Cost structure Target profit analysis

CVP analysis

Degree of operating leverage equals Blank______. Multiple choice question. Contribution margin ÷ Total sales Contribution margin ÷ Net operating income Gross margin ÷ Net operating income Total sales ÷ Net operating income

Contribution margin ÷ Net operating income

True or False Question True or false: The margin of safety is the excess of break-even sales dollars over budgeted (or actual) sales dollars. True false question.TrueFalse

False Reason: The margin of safety is the excess of the budgeted (or actual) sales dollars over break-even sales dollars.

True or false: CVP analysis is only used for break-even and target profit analysis. True false question.TrueFalse

FalseReason:CVP analysis can be used for a variety of different managerial decisions.

True or false: Cost structure refers to how a company uses product and period costs in an organization. True false question.TrueFalse

FalseReason:Cost structure refers to how a company uses fixed and variable costs in an organization.

The extent to which a company uses fixed costs (as opposed to variable costs) in its operations is called

Field 1: cost Field 2: structure

The excess of the budgeted (or actual) sales dollars over break-even sales is called the _______of _______ .

Field 1: margin Field 2: safety

When performing a multiproduct CVP analysis, the weighted-average contribution margin per unit is computed using ________ the mix, and the ________ mix is used to compute the weighted-average contribution margin ratio.

Field 1: product or products Field 2: sales or sale

Which of the following are assumptions of cost volume profit analysis? Multiple select question. In multi-product companies, the sales mix is constant. Production volume is equal to sales volume. Total cost and total revenue are affected by both volume and price changes. All costs can be classified as either fixed or variable.

In multi-product companies, the sales mix is constant. Production volume is equal to sales volume. All costs can be classified as either fixed or variable.

CVP Blank______. Multiple select question. allows managers to see how changing one variable can impact another can be used to make many different decisions can be used for "what-if" analysis only works in single product companies

allows managers to see how changing one variable can impact another can be used to make many different decisions can be used for "what-if" analysis

Solving for the sales level needed to achieve a profit of zero is Blank______ analysis. Multiple choice question. break-even target profit cost volume profit

break-even

Contribution margin Blank______. Multiple choice question. is first used to cover variable expenses equals sales minus fixed expenses covers fixed cost and profit

covers fixed cost and profit

An increase in sales will increase net operating income by a multiple of that increase in sales. The multiple is known as the Blank______. Multiple choice question. sales commissions percentage degree of operating leverage leverage leap margin of safety

degree of operating leverage

When constructing a CVP graph, the vertical axis represents Blank______. Multiple choice question. unit volume variable costs fixed costs dollars

dollars

The weighted average unit contribution margin Blank______. Multiple select question. is based on the relative percentage of each unit sold is calculated by adding up the per unit contribution margin for each product and dividing by the number of products assumes that the percentage of each product sold is constant is used instead of the single product contribution margin in multi-product break-even analysis

is based on the relative percentage of each unit sold assumes that the percentage of each product sold is constant is used instead of the single product contribution margin in multi-product break-even analysis

The weighted average unit contribution margin Blank______. Multiple select question. is based on the relative percentage of each unit sold is used instead of the single product contribution margin in multi-product break-even analysis is calculated by adding up the per unit contribution margin for each product and dividing by the number of products assumes that the percentage of each product sold is constant

is based on the relative percentage of each unit sold is used instead of the single product contribution margin in multi-product break-even analysis assumes that the percentage of each product sold is constant

The weighted average unit contribution margin is the average unit contribution margin of multiple products weighted according to Blank______. Multiple choice question. contribution margin per unit percentage of units sold selling price of units sold

percentage of units sold

According to the assumptions of CVP, Blank______ will not change as the volume of a product increases or decreases. Multiple choice question. price unit fixed cost total contribution margin total variable cost

price

According to the assumptions of CVP, Blank______ will not change as the volume of a product increases or decreases. Multiple choice question. total contribution margin total variable cost unit fixed cost price

price

The break-even point can be affected by Blank______. Multiple select question. product mix net operating income sales mix total fixed costs

product mix sales mix total fixed costs

When preparing a multi-product break-even analysis, the assumption is ordinarily made that the Blank______ will not change. Multiple choice question. units produced total variable costs units sold sales mix

sales mix

The weighted-average contribution margin ratio is calculated using the Blank______. Multiple choice question. unit sales mix average sales price per product total sales mix

total sales mix

When preparing a CVP graph, the slope of the total cost line represents Blank______. Multiple choice question. sales dollars per unit sales volume total fixed costs variable cost per unit

variable cost per unit

Contribution margin equals sales minus Blank______. Multiple select question. fixed manufacturing overhead fixed selling and administrative costs variable selling and administrative costs variable manufacturing costs

variable selling and administrative costs variable manufacturing costs

CVP analysis can be useful in deciding Blank______. Multiple select question. which products to offer what investments to make how to change the sick leave policy for employees which services to offer

which products to offer what investments to make which services to offer

The goal of break-even analysis is to find the level of sales where profit is equal to Blank______. Multiple choice question. total fixed costs zero total variable costs the contribution margin

zero

The goal of break-even analysis is to find the level of sales where profit is equal to Blank______. Multiple choice question. total variable costs the contribution margin total fixed costs zero

zero