Ch 3

If a firm has a contribution margin of $78,090 and a net income of $13,700 for the current month, what is their degree of operating leverage?

57

When fixed costs decrease and all other variables remain unchanged, the break-even point will

decrease

A company's product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin ratio?

60%

When sales price increases and all other variables are held constant, the break-even point will

decrease

Company A wants to earn $5,000 profit in the month of January. If their fixed costs are $10,000 and their product has a per-unit contribution margin of $250, how many units must they sell to reach their target income?

60

If the sales mix in a multi-product environment shifts to a higher volume in low contribution margin products, the break-even point will

increase because the per composite unit contribution margin will decrease

Break-even for a multiple product firm

can be calculated by dividing total fixed costs by the contribution margin of a composite unit

The amount of a unit's sales price that helps to cover fixed expenses is its

contribution margin

When sales price decreases and all other variables are held constant, the break-even point will

increase

A company has pre-tax or operating income of $120,000. If the tax rate is 40%, what is the company's after-tax income?

$72,000

Macom Manufacturing has total contribution margin of $61,250 and net income of $24,500 for the month of June. Marcus expects sales volume to increase by 10% in July. What are the degree of operating leverage and the expected percent change in income for Macom Manufacturing?

.25 25%

If a company has fixed costs of $6,000 per month and their product that sells for $200 has a contribution margin ratio of 30%, how many units must they sell in order to break even?

100

A company's contribution margin per unit is $25. If the company increases its activity level from 200 units to 350 units, how much will its total contribution margin increase?

$3,750

A company sells its products for $80 per unit and has per-unit variable costs of $30. What is the contribution margin per unit?

$50

A company's product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin per unit?

$90

When variable costs increase and all other variables remain unchanged, the break-even point will

increase

When fixed costs increase and all other variables remain unchanged, the contribution margin will

remain unchanged