ACCT2023 ch5 connect

$909,677 ($564,000/.62)

Company A has fixed costs of $564,000 and a contribution margin of 62%. Sales dollars to break-even rounded to the nearest whole dollar amount it

$168,000 ((200,000*$4)-$632,000)

Company A sold 200,000 units. Selling price is $7 per unit, contribution margin is $4 per unit, and the fixed expenses total $632,000. Company A's profit is:

equal to

Once the break-even point has been reached, the sale of an additional unit of product will lead to an increase in the contribution margin the is _____________________ (2 words) the increase in net operating income

27% ($2.43/$9)

Spice sells paprika for $9 per bottle. Each bottle incurs $2.43 in variable cost. Spice incurs annual fixed costs of $825,000. The variable expense ratio for paprika is

contribution margin

To estimate the effect profits for a planned increase in sales, multiply the increase in units sold by the unit ______________________________ (2 words)

sales volume

When preparing CVP graph, the horizontal axis represents __________________ (2 words)

A, D

Which of the following items are found above the contribution margin on a contribution margin format income statement? A. sales B. fixed expenses C. net operating income D. variable expenses

B, D

The single point where the total revenue line crosses the total expense line on the CVP graph indicates A. profit is greater than zero B. profit equals zero C. profit is less than zero D. the break-even point

sales

The variable expense ratio is the ratio of variable expense to

$1,520,000; ($240,000+$930,000)/.77

The company's contribution margin ratio is 77%. Fixed expenses are $240,000. To achieve a target profit of $930,000, the company's sales rounded to the nearest dollar must be:

7,625 units ($305,000/$40)

A company has a target profit of $204,000. The company's fixed costs are $305,000. The contribution margin per unit is $40. What is the break-even point in unit sales

$174,000 ($600,000*29%)

Annie's antique store has a contribution margin ratio of 29%. The break-even point has been reached. If the store generates an additional $600,000 of sales for the year, net operating income will increase by

increase; $18,000 (2,000*($15-$6))

Fantastic frames sells its frames for $15 per unit. Variable costs total $6 per unit, and fixed costs total $90,000. If the number of units being sold increases by 2,000 frames, net operating income will (increase/ decrease) by ___________

A, B

Terry's trees has reached its break-even point and has calculated its contribution margin ratio to be 70%. For each $1 increase in sales: A. net operating income will increase by $.70 B. total contribution margin will increase by $.70 C. net operating income will increase by $.30 D. total contribution margin will increase by $.30

higher, lower

The _________ (higher/lower) margin of safety, the ____________ (higher/lower) the risk of incurring a loss.

total expense; total fixed expense

To prepare a CVP graph, lines must be drawn representing total revenue, ___________________ (2 words), and __________________________ (3 words)

profit; loss

The vertical distance between the total revenue line and the total expense line on a CVP graph represents the total _________________ or _________________ (1 word per blank)

contribution margin

To calculate the degree of operating leverage, divide __________________________ (2 words) by net operating income

$0

To convert the formula for sales dollars required to attain a target profit to sales dollars required to break even, set the target profit to

sales mix

When preparing a multi-product break-even analysis, the assumption is ordinarily made that the ____________________ (2 words) will not change

CM/ sales

The calculation of contribution margin (CM) ratio is

$20 ($11+($4,500/500)

A company has an opportunity to make a bulk sale that would not impact regular sales or total fixed expenses. The variable cost per unit is $11 and the company desires a total profit of $4,500. The quoted selling price per unit for 500 units should be

$301,000 ((67%*$1,430,000)-$657,000)

A company has total sales of $1,430,000. Fixed expenses are $657,000 and the contribution margin ratio is 67%. Contribution margin is:

$180,000; 20,000*($20-$11)

A company sold 20,000 units of its product at selling price of $20. The variable cost per unit is $11. Fixed expenses total $150,000. The contribution margin is:

$36,000 ((750-450)*$120)

A company sold 750 units with a contribution making of $120 per unit. If the company has a break-even point of 450 units, the net operating income is

A, C, E

CVP analysis allows companies to easily identify the change in profit due to changes in A. selling price B. location C. volume D. management E. costs

A, B, D, E, F

CVP analysis focuses on how profits are affected by A. total fixed costs B. mix of products C. break-even point D. selling price E. unit variable cost F. sales volume

$130,000; (25,000-15,000)*($25-$12)

Ceramic Creations sells pots for $25. There variable cost per pot is $12 and 15,000 pots must be sold to break0even. If ceramic creations sells 25,000 pots, net operating income will be :

B (35*$10), C (35*$55), D (35*($55-$10)-$700)

Elle's Elephant Shop sells giant stuffed elephants for $55 each. Each elephant has a variable cost of $10 and total fixed costs are $700. If Elle sells 35 elephants this month: A. total costs = $1,250 B. total variable costs = $350 C. total sales = $1,925 D. profits = $875

53% ($100,170/$189,000)

Gifts Galore has $189,000 of sales revenue. Total contribution margin was $100,170 and total fixed expenses were $27,500. The CM ratio was

net loss

If the total contribution margin is less than the total fixed expenses, then a ___________________ (2 words) will occur.

9000 units ($180,000/$20)

Macy sells oranges for $20 a crate. If the company's margin of safety is $180,000, the margin of safety in units is

4,800 (($4,000+$3,200)/($15-$13.50)

Paula's perfume has a target profit of $4,000 per month. Perfume sells for $15 per bottle and variable costs are $13.50 per bottle. Fixed costs are $3,200 per month. The number of bottles that must be sold each month to earn the target profit is

A ($125-$60), D ((12,000*$65)-$400,000

Peter's putters sells each putter for $125. There variable cost is $60 per putter and fixed costs total $400,000. Based on this information A. the contribution margin per putter is $65 B. Peter's putters is unable to make a profit C. lowering variable cost per unit to $45 would result in a contribution margin of $70 per unit D. the sale of 12,000 putter results in net operating income of $380,000

A, C, D

The break-even point calculation is affected by: A. sales mix B. number of batches produced C. selling price per unit D. cost per unit

total fixed expenses

The break-even point is reached wen the contribution margin is equal to _______________________________ (3 words)

B, C

When making a decision using incremental analysis consider the A. volume that would occur regardless of the decision B. change in sales dollars resulting specifically from the decision C. change in cost resulting specifically from the decision D. old income statement in comparison to the new income statement

fixed; profit

Contribution margin is first used to cover _______ expenses. Once the break-even point has been reached, contribution margin becomes __________. (one word per blank)

A, B

The profit graph allows users to easily identify A. the profit at ant given sales volume B. the sales volume required to reach the break-even point C. total expenses incurred at any given sales volume