A202 Ch: 3 Biagioni

A company reports the following for a sales volume of 200 units: $100,000 in sales and $80,000 in variable costs. IF 200 units is the company's break-even point, the sale of 201 units will result in a net profit of:

$100

Adam's Sports Store has a contribution margin ratio of 55% and has already passed the break-even point for the year. If Adam's generated additional sales of $250,000 by the end of the year, net operating income for the year will increase by:

$137,500

Chrissy's Cupcakes has $832,000 in sales and $265,000 in fixed expenses. Given a contribution margin ratio of 72%, Chrissy's profit (loss) is:

$334,040

Company A's product sells for $90 and has a variable cost of $35 per unit. Fixed costs total $550,000. If company A sells 16,000 units, the contribution margin per unit is:

$55

Given $250,000 of fixed costs per year and a contribution margin ratio of 40%, what amount of sales dollars is required to break-even.

$625,000

CVP analysis focuses on how profits are affected by:

-Mix of products sold -Sales volume -Total fixed costs -Unit variable cost -Selling price

At the break-even point:

-Net operating income is zero. -Total revenue equals total cost

Elle's Elephant Shop sells giant stuffed elephants for $55 each. Each elephant has variable costs of $10 and total fixed costs are $700. If Ellie sells 35 elephants this month, what are the profit, total variable costs, and total sales?

-Profit = $875 -Total variable costs = $350 -Total sales = $1,925

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:

-Total contribution margin will increase by $0.70 -Net operating income will increase by $0.70

Spice sells paprika for $9.00 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:

27%

Company A sells its product for $10 per unit. If company A has variable expenses of $5 per unit and fixed expenses of $200,000, the break-even point in units and dollars is:

40,000 Units

Gifts Galore had $189,000 of sales revenue 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 foxed costs are $305,000. The contribution margin per unit is $40. What is the BREAK-EVEN point in unit sales?

7,625 Units

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?

CVP analysis

To calculate profit, multiply the _____ per unit by sales volume and subtract total fixed cost.

Contribution Margin

The calculation of contribution margin (CM) ratio is:

Contribution margin/sales

A company has reached its break-even point when the contribution margin _____ fixed expenses.

Equals

Contribution margin is first used to cover ______ expenses. Once the break-even point has been reached, the contribution margin becomes ______.

Fixed, profit

The equation used to solve for the variable expense ratio using per unit values is variable cost per unit divided by:

Sales price per unit