UFC1 module 7 quiz

In 2022, Teller Company sold 3000 units at $600 each. Unit variable costs were $420 and fixed expenses were $270000. The same unit selling price, unit variable expenses, and fixed expenses are expected for 2023. What is Teller's break-even point in units for 2023?

$270000 / ($600 - $420) = 1500(Fixed expenses / (Unit selling price - Unit variable cost) = Break-even point in units)

A company has a unit contribution margin of $120 and a contribution margin ratio of 40%. What is the unit selling price?

$300.

For Sanborn Co., sales revenue is $1000000, fixed expenses are $300000, and the unit contribution margin is $60. What is the company's break-even point?

$300000 / $60 = 5000 units(Fixed Expenses / Unit contribution margin = Break even point in units)

For Buffalo Co., at a sales volume of 4000 units, sales revenue is $75000, variable costs total $50000, and fixed expenses are $21000. What is the unit contribution margin?

$75000 - $50000 = $25000; $25000 / 4000 = $6.25(Sales - Variable expenses = Contribution Margin; Contribution Margin / Units sold = Unit contribution margin)

Hinge Manufacturing's cost of goods sold is $420000 variable and $240000 fixed. The company's selling and administrative expenses are $300000 variable and $360000 fixed. If the company's sales revenue is $1580000, what is its contribution margin?

$860000

Mercantile Corporation has sales of $2000000, variable costs of $800000, and fixed costs of $900000. Mercantile's margin of safety ratio is

$900000 / (($2000000 - $800000)/$2000000) = $1500000; ($2000000 - $1500000) / $2000000 = 0.25 or 25%(Fixed Costs/ Contribution Margin Ratio) = Break even in dollars; (Expected (Budgeted) Sales - Break-even in dollars) / Expected (Budgeted) Sales) = Margin of Safety ratio)

Off-Road RK Ramblers Inc. produces small lightweight camping trailers with rear kitchen facilities. The company's fixed costs are $900000 per year and its variable costs are 55% of the unit selling price of $16000. What is the company's break-even point in sales dollars?

$900000 / (1 - 0.55) = $2000000(Fixed Costs/CM Ratio = Break-even Sales Dollars)

Moonwalker's CVP income statement included sales of 5000 units, unit selling price of $100, unit variable cost of $60, and fixed expenses of $110000. Contribution margin is

($100 - $60) x 5000 = $200000((Unit selling price - Unit variable cost) x units sold = Contribution Margin)

Hope Cosmetics Company produces tinted SPF 100 moisturizer that it sells for $120 each. Each bottle costs $12 of variable costs to make. During the most recent quarter, 1200 bottles of moisturizer were manufactured and sold. Fixed costs for the quarter were $21 per unit for a total of $25200. What is the company's contribution margin ratio?

($120 - $12) / $120 = 0.90 or 90%(Unit selling price - Unit Variable Costs) / Unit selling price = CM ratio

Hollis Industries produces flash drives for computers, which it sells for $20 each. Each flash drive costs $13 of variable costs to make. During April, 1000 drives were sold. Fixed costs for March were $2 per unit for a total of $1000 for the month. What is the contribution margin ratio?

($20 - $13) / $20 = 0.35 or 35%(Unit selling price - Unit variable costs) / Unit selling price = Contribution margin ratio

In 2022, Carrow sold 3000 units at $500 each. Unit variable cost was $250 and fixed expenses totaled $500000. The same unit selling price is expected for 2023. Carrow is tentatively planning to invest in equipment that would increase fixed costs by 20% while decreasing unit variable cost by 20%. If Carrow makes the investment, what will be the break-even point in sales units for 2023?

($500000 * 1.20) / ($500 - ($250 * 0.80)) = 2000(Fixed expenses x Increase Percentage in Fixed Cost) / (Unit selling price - (Unit variable costs x Decrease Percentage in Unit variable Costs) = Break-even point in sales units)

Off-Road RK Ramblers, Inc. produces small lightweight camping trailers with rear kitchen facilities. The company's fixed costs are $900000 per year and its variable costs are 55% of the unit selling price of $16000. How many campers must the company sell to earn a net income of $180000?

($900000 + $180000) / (1 - 0.55) = $2400000; $2400000 / $16000 = 150(Fixed Costs + Net Income) / (CM Ratio) = Break-even Sales Dollars; Sales dollars/ Unit Price = Units for Target Net Income

Miller Manufacturing's degree of operating leverage is 1.5. Warren Corporation's degree of operating leverage is 3. Warren's earnings would go up (or down) by ________ as much as Miller's with an equal increase (or decrease) in sales.

2.0 times

For Pierce Company, sales revenue is $500000, variable expenses are $340000, and fixed expenses are $140000. Pierce's contribution margin ratio is

32%.

Reveal Technologies sells indoor high-resolution security cameras with a unit selling price of $90, a unit contribution margin of $54, and a contribution margin ratio of 60%. The company projects total fixed costs for the next year to be $3348000. How many units must the company sell to break-even?

62000

The contribution margin ratio is

Contribution Margin / Sales

The increased use of automation and decreased use of labor in companies has caused a trend towards an increase in

fixed costs and a decrease in variable costs

The activity that causes changes in the behavior of costs is referred to as the activity

index.

A company with a higher contribution margin ratio is

more sensitive to changes in the volume of sales revenue.

Reducing reliance on human workers and instead, investing heavily in technology will

reduce variable costs and increase fixed costs.

A fixed cost is a cost which

remains constant in total with changes in the level of activity.

Cost behavior analysis is the determination of how a firm's costs

respond to changes in the level of business activity.

Cost behavior analysis applies to

retailers. wholesalers. manufacturers. all entities.

For an activity base to be useful in cost behavior analysis

there should be a correlation between changes in the level of activity and changes in costs.

Delivery costs are a mixed cost and utilities are a variable cost.

true

A CVP graph does not include a

variable cost line.

A cost that remains constant per unit at various levels of activity is a

variable cost.

Contribution margin is the amount of revenue remaining after deducting

variable costs.

During March, O'Malley Company sold 100000 units for $13 per unit. Fixed costs were $350000 and net income was $250000. What would be reported as variable expenses in the company's CVP income statement for March?

$250000 + $350000 = $600000; ($100000 x $13) - $600000 = $700000(Selling price per unit x Units) - (Net Income + Fixed Costs) = Variable Expenses

In a CVP income statement, selling expenses are generally

broken down into its variable and fixed cost components.

Cost-volume-profit analysis is the study of the effects of

changes in costs and volume on a company's profit.

If a company had a contribution margin of $1000000 and a contribution margin ratio of 40%, total variable costs must have been

$1000000 / 0.40 = $2500000; $2500000 - $1000000 = $1500000(Contribution Margin / Contribution Margin Ratio = Total Sales; Total Sales - Contribution Margin = Total Variable Costs)

Mercantile Corporation has sales of $2000000, variable costs of $800000, and fixed costs of $900000. Mercantile's degree of operating leverage is

$2000000 - $800000 = $1200000 CM; $2000000 - $800000 - $900000 = $300000; $1200000 / $300000 = 4.00(Sales - Variable Costs = Contribution Margin; Sales- Variable Costs - Fixed Costs = Net Operating Income; Contribution Margin / Net Operating Income = Operating leverage)

A company sells a product that has a unit selling price of $5, unit variable cost of $3, and total fixed costs of $240000. The quantity of units the company must sell to break even is

$240000 / ($5 - $3) = 120000 unitsTotal fixed costs / (unit selling price - unit variable cost) = Break-even point in units

An increase in the level of activity will have the following effects on unit costs for variable and fixed costs:

Unit Variable Cost: Remains constant Unit Fixed Cost: Decreases

The CVP income statement classifies costs

as variable or fixed and computes contribution margin.

In a CVP income statement, cost of goods sold is generally

broken down into its variable and fixed cost components.

A variable cost is a cost that

varies in total in proportion to changes in the level of activity.