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Exam 7: Cost-Volume-Profit Analysis

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Question 61

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To find the sales revenue needed to breakeven,the formula used could be

A) fixed expenses ÷ contribution margin ratio.
B) contribution margin per unit ÷ fixed expenses.
C) contribution margin ratio ÷ fixed expenses.
D) fixed expenses ÷ contribution margin per unit.

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Question 62

Multiple Choice

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Palmer's Gourmet Chocolates produces and sells assorted boxed chocolates.The unit selling price is $50,unit variable costs are $25,and total fixed costs are $2,000.How many boxes of chocolates must Palmer's Gourmet Chocolates sell to breakeven?

A) 4,000
B) 40
C) 27
D) 80

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Question 63

Multiple Choice

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To find the sales revenue (sales in dollars) needed in order to breakeven or generate a target profit,the formula used is

Washington Bottling Company provides the following information about its single product. What is the contribution margin per unit?

Martin Enterprises has a predicted operating income of $140,000.Its total variable expenses are $50,000 and its total fixed expenses are $20,000.The unit contribution margin for the company's sole product is $10.The number of units that Martin Enterprises needs to sell to achieve the predicted operating income would be

The manager at the Yarn Factory changed the price of spools to increase sales.The current price per unit is $13.85 per box of 500 spools;and,the forecasted lower price per unit to increase sales is $9.95 per box of 500 spools.If the variable expenses remain at $9.14 and the fixed expenses remain $3,400 how many units must be sold at the new price to breakeven? Compute the contribution margin per unit using the old sales price.Next,compute the contribution margin per unit using the new sales price.Use the new unit contribution margin to compute breakeven sales in units.What is the breakeven sales in units?

The contribution margin ratio explains the percentage of each sales dollar that

Given breakeven sales in units of 45,000 and a unit contribution margin of $4,how many units must be sold to reach a target operating income of $18,000?

On a CVP graph,total fixed costs are shown as a horizontal line.

What will be the effect on the contribution margin ratio if the selling price per unit decreases and variable cost per unit remains the same?

To find the breakeven point using the shortcut formulas,you use

Jack's Toys sells kites for $20 each.Variable costs are $8 per refill.Fixed costs are $2,400 per month.What is the contribution margin per kite?

Bravo Company sells two products,green camouflage pants and orange camouflage pants.Bravo predicts that it will sell 1,000 pairs of green pants and 1,500 pairs of orange pants in the next period.The unit contribution margins for green pants and orange pants are $8.00 and $7.50,respectively.What is the weighted average unit contribution margin?

Kent Coffee Shoppe total sales revenue is $850,000,its variable expenses total $250,000,and its fixed expenses total $375,000.Compute the overall contribution margin ratio and use the contribution margin ratio in the shortcut formula to predict the breakeven point in dollars.

When using the income statement approach to finding breakeven,which of the following is true?

If total fixed expenses are $65,000,the target operating income is $15,000 and the contribution margin is $25 per unit,the sales needed to achieve the target operating income will be 3,200 units.

Which of the following is not an approach used to calculate the breakeven point?

Washington Bottling Company provides the following information about its single product. What is the breakeven point in units?

Jackie's Snacks sells fudge,caramels,and popcorn.It sold 12,000 units last year.Popcorn outsold fudge by a margin of 2 to 1.Sales of caramels were the same as sales of popcorn.Fixed costs for Jackie's Snacks are $14,000.Additional information follows: The weighted average contribution margin for the three products of Jackie's Snacks is

The following selected data relates to Ivory Corporation: Assuming 8,500 units are sold,what is the contribution margin?