RQ 3 - Chap 5
Atlas Corporation sells 100 bicycles during a month at a price of $500 per unit. The variable expenses amount to $300 per bicycle. How much does profit increase if it sells one more bicycle?
$200
Base Corporation has sales of $100,000, variable costs of $40,000, and fixed costs of $30,000 currently. The company is expecting a $36,000 increase in sales. What is the change in contribution margin for the company?
$21,600
If unit contribution margin is $5.00, and quantity is 10,000, and fixed expenses are $25,000; what would our profit be?
$25,000
The current sales of Trent, Inc., are $400,000, with a contribution margin of $200,000. The company's degree of operating leverage is 2. If the company anticipates a 30% increase in sales, what is the percentage change in net operating income for Trent, Inc.?
60%
What is represented on the X axis of a cost-volume-profit (CVP) graph?
sales volume
Future Corporation has a single product; the product selling price is $100 and variable costs are $60. The company's fixed expenses are $10,000. What is the company's break-even point in sales dollars?
$25,000
Break-even point is the level of sales at which ______.
total revenue equals total costs
Once the break-even point has been reached, net operating income will increase by the amount of the _____ for each additional unit sold.
unit contribution margin
What is Ralph Corporation's margin of safety in dollars?
$1,000,000
Atlas Corporation sells 100 bicycles during a month. The contribution margin per bicycle is $200. The monthly fixed expenses are $8,000. Compute the profit from the sale of 100 bicycles.
$12,000
If our break-even is at 1,000 units, and our contribution margin is $20 per unit, what would our profit be if we sold 1,200 units?
$4,000
What are the unit sales required to attain a target profit of $120,000?
$4000
If sales increase by $50,000, what will be the net operating income for the company?
$55,000
Which of the following formulas is used to calculate the contribution margin ratio?
(Sales - Variable expenses) ÷ Sales
Frank Corporation has a single product. Its selling price is $80 and the variable costs are $30. The company's fixed expenses are $5,000. What is the company's break-even point in unit sales?
100 units
Winter Corporation's current sales are $500,000. The contribution margin is $300,000 and the net operating income is $100,000. What is the company's degree of operating leverage?
3.00
Team Corporation has sales of $1 million, fixed expenses of $200,000, and variable expenses of $650,000 for the month of March. What is the contribution margin ratio of the company for the month of March?
35%
Cartier Corporation currently sells its products for $50 per unit. The company's variable costs are $20 per unit. Fixed expenses amount to a total of $5,000 per month. What is the company's variable cost ratio?
40%
The target profit is zero in break-even analysis.
True
What is the contribution income statement expressed as an equation?
Profit = (Sales - Variable Expenses) - Fixed Expenses
Another way of stating the CVP equation is:
Profit = (Unit Contribution Margin x Quantity) - Fixed Expenses
Which of the following explains contribution margin?
Sales minus variable cost
On a CVP graph, break-even is where which two lines intersect?
The total expenses and total revenue lines.
What is usually plotted as a horizontal line on the CVP graph?
fixed expenses
Alpha Corporation is currently selling 500 skateboards per month. The unit selling price and variable expenses are $60 and $35 respectively. The fixed expenses amount to $5,000 per month. The company has an opportunity to make a bulk sale of 100 skateboards. This sale will not affect the company's regular sales or total fixed expenses. What unit price should be charged if the company is seeking a profit of $2,000 on the bulk sale?
$55
