5.2 Smartbook

In a CVP graph, the vertical axis represents Blank______. Multiple choice question. units dollars

dollars

The equation that should be used in setting a target selling price for a special order bulk sale that does not affect a company's normal sales is: selling price per unit = Blank______. Multiple choice question. variable cost per unit + desired profit per unit variable cost per unit + fixed cost per unit contribution margin per unit + fixed cost per unit

variable cost per unit + desired profit per unit

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 $__________ 11=(4500/500)

$20

A company sells 500 sleds per month for $80. Variable costs are $41 per unit and fixed expenses are $3,500 per month. The company thinks that using a new material would increase sales by 70 units per month. If the new material increases variable costs by $4 per unit, the impact on contribution margin would be a Blank______. Multiple choice question. $2,450 increase $2,280 decrease $450 increase $2,730 increase

$450 increase

Sweet Dreams sells pillows for $25 each. Variable costs are $15 per pillow. The company is considering improving the quality of materials which will increase variable costs to $19. The company expects the improved materials will increase sales from 1,200 to 1,500 pillows per month. The impact of this change on total contribution margin would be a(n) _________ (increase/decrease) of $_________

decrease 3,000

Tasty Tangerine is currently selling 50,000 boxes for $25 per box. Variable cost per box is $17 and fixed costs total $260,000. A plan is being considered to spend $60,000 on advertising and reduce the selling price by $2 per box. Management believes this plan will increase sales volume by 24,000 boxes. If management's predictions are correct, making these changes will cause net income for the year to Blank______. Multiple choice question. increase by $44,000 increase by $132,000 decrease by $104,000 decrease by $16,000

decrease by $16,000

Company A produces and sells 10,000 units of its product for $10 per unit. Variable costs are $4 per unit and fixed costs total $30,000. A move to a larger facility would increase rent expense by $8,000, and allow the company to meet its demand for an additional 1,000 units. If the move is made, profits will Blank______. Multiple choice question. increase by $6,000 increase by $10,000 decrease by $8,000 decrease by $2,000

decrease by $2,000

A company is currently selling 10,000 units of product for $40 per unit. The unit contribution margin is $27. The company believes that spending $50,000 on advertising will increase sales by 750 units per month and enable them to increase the selling price to $45 per unit. If this change is implemented, profits will Blank______. Multiple choice question. increase by $24,000 increase by $74,000 increase by $3,750 decrease by $29,750

increase by $24,000

Goldin Corporation currently pays its salesperson a flat salary of $5,000 per month and is considering paying $20 per unit instead. Sales are currently 200 units per month. Goldin believes the compensation change will increase unit sales by 25%. The current contribution margin is $80 per unit. If the change is implemented, net operating income will Blank______. Multiple choice question. decrease by $4,000 decrease by $1,000 increase by $1,000 increase by $4,000

increase by $4,000

Bluin Corporation pays its salesperson a flat salary of $5,750 per month and is considering paying $30 per unit instead. Current unit sales are 250 per month, but Bluin believes the compensation change will increase unit sales by 50%. Bluin's current contribution margin is $100 per unit. If Bluin switches the compensation and sales grow as expected, net operating income will Blank______ per month.

increase by $7,000

A company currently has sales of $700,000 and a contribution margin ratio of 45%. As a result of increasing advertising expense by $8,000, the company expects to increase sales to $735,000. If this is done and these results occur, net operating income will Blank______. Multiple choice question. decrease by $12,250 decrease by $8,000 increase by $7,750 increase by $15,750 ((735,000 - 700,000) x 45%) - 8,000

increase by $7,750

A company currently has sales of $700,000 and a contribution margin ratio of 45%. As a result of increasing advertising expense by $8,000, the company expects to increase sales to $735,000. If this is done and these results occur, net operating income will Blank______. Multiple choice question. increase by $7,750 increase by $15,750 decrease by $12,250 decrease by $8,000

increase by $7,750

A simpler form of the CVP graph is called the _______ graph.

profit

The profit graph allows users to easily identify Blank______. Multiple select question. -the sales volume required to reach the break-even point -total expenses incurred at any given sales volume -the profit at any given sales volume

the sales volume required to reach the break even point the profit at any given sales volume

In a CVP graph, the horizontal axis represents Blank______. Multiple choice question. total costs sales dollars variable costs unit sales

unit sales