Managerial Accounting
Marjorie's Mugs sold 300 mugs last year for $20 each. Variable costs were $7 per mug and total fixed costs were $1,700. Marjorie's Mugs' profit was:
$2,200
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
JVL Enterprises has set a target profit of $126,000. The company sells a single product for $50 per unit. Variable costs are $15 per unit and fixed costs total $98,000. How many units does JVL have to sell to BREAK-EVEN?
2,800
Given sales of $1,452,000, variable expenses of $958,320 and fixed expenses of $354,000, the contribution margin ratio is:
34%
Profit equals:
(P x Q) - (V x Q) - fixed expenses
Contribution margin is first used to cover ________ expenses. Once the break-even point has been reached, contribution margin becomes _______
Blank 1: fixed Blank 2: profit or income
The term "cost structure" refers to the relative proportion of _____ and ______ costs in an organization.
Blank 1: variable Blank 2: fixed
True or false: Cost structure refers to the relative portion of product and period costs in an organization.
False
The amount by which sales can drop before losses are incurred is the
Margin of Safety
Which of the following statements is correct?
The higher the margin of safety, the lower the risk of incurring a loss.
Which of the following items are found above the contribution margin on a contribution margin format income statement?
Variable expenses Sales
Company A has sales of $500,000, variable costs of $350,000, and fixed costs of $150,000. Company A has:
a contribution margin equal to fixed costs reached the break-even point
The contribution margin equals sales minus:
all variable costs
When constructing a CVP graph, the vertical axis represents
dollars
The relative proportions in which a company's products are sold is referred to as
sales mix
The term used for the relative proportion in which a company's products are sold is:
sales mix
When preparing a CVP graph, the horizontal axis represents
sales volume
Place the following items in the correct order in which they appear on the contribution margin format income statement.
1. Sales 2. Variable Expenses 3. Contribution margin 4. Fixed Expenses 5. Net Operating Income
Gifts Galore had $189,000 of Sales Revenue from wrapping paper sales last year. Total contribution margin was $100,170 and total fixed expenses were $27,500. The contribution margin ratio was:
53%
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?
7,625 units
A company's selling price is $90 per unit, variable cost per unit is $28 and total fixed expenses are $320,000. The number of unit sales needed to earn a target profit of $200,800 is:
8,400
Contribution margin ratio is equal to ________ divided by
Blank 1: contribution Blank 2: margin Blank 3: sales or revenue
The degree of operating leverage =
Contribution margin/Net operating income
The calculation of contribution margin (CM) ratio is:
contribution margin/sales
The measure of how a percentage change in sales affects profits at any given level of sales is the:
degree of operating leverage
When preparing a CVP graph, the horizontal axis represents:
sales volume
To prepare a CVP graph, lines must be drawn representing total revenue,
total expense, and total fixed expense
Blissful Blankets' target profit is $520,000. Each blanket has a contribution margin of $21. Fixed costs are $320,000. The number of blankets Blissful Blankets need to sell in order to achieve its target profit is:
40,000 Reason: $520,000 = $21 x Q - $320,000; $520,000 + 320,000 = $21xQ; $840,000/$21 = 40,000 blankets
Total contribution margin equals:
fixed expenses plus net operating income