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Exam 21: Cost-Volume-Profit Analysis

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Question 61

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A firm sells two different products,A and A.Total fixed costs for this firm are $1,260,000.Additional selling prices and cost information for both products follow: Required: (a) Calculate the contribution margin per composite unit.(b) Calculate the break-even point in units of each individual product.(c) If pretax income before taxes of $294,000 is desired, how many units of A and B must be sold? B.For each unit of B, the firm sells two units of

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(c)Composite units to earn $294,0...

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Question 62

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Hanover Hats produces specialty logo baseball caps for a variety of customers.Selected cost data for Hanover follows: direct materials cost $8,000; sales commissions,$9,000; depreciation on factory equipment,$21,000; factory labor,$16,000; factory lease,$24,000.If Hanover Hats sells 6,100 caps at an average price of $12 for each cap,what is the company's contribution margin?

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Question 63

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The contribution margin per unit expressed as a percentage of the product's selling price is the:

A product sells for $30 per unit and has variable costs of $18 per unit.The fixed costs are $720,000.If the variable costs per unit were to decrease to $15 per unit and fixed costs increase to $900,000,and the selling price does not change,break-even point in units would:

To calculate the break-even point in units,one must know unit fixed cost,unit variable cost,and sales price.

The contribution margin ratio:

A company manufactures and sells a product for $120 per unit.The company's fixed costs are $68,760,and its variable costs are $90 per unit.The company's break-even point in units is:

What is a scatter diagram? How is a scatter diagram used to estimate cost behavior?

A company manufactures and sells spotlights.Each spotlight sells for $145.The variable cost per unit is $98,and the company's total fixed costs are $235,000.Predicted sales are 15,000 units.What is the contribution margin per unit?

The contribution margin per unit is the price at which a unit must be sold in order for the company to break even.

A product has a contribution margin per unit of $17 and sells at $25 per unit.If the break-even point is 82,000 units,calculate (a)the variable costs per unit and (b)the total fixed costs.

Abrams Co.has total fixed costs of $240,000 and a contribution margin ratio of 40%.If rent expense increases by $5,000,how much will sales have to increase to cover this increase in costs?

Identify items a,b,and c in the cost-volume-profit graph shown below.

Use the following information to determine the margin of safety in dollars: Unit sales ……………………… 50,000 Units Dollar sales……………………… $500,000 Fixed costs……………………… $204,000 Variable costs ……………………… $187,500

A product sells for $200 per unit,and its variable costs per unit are $130.The fixed costs are $420,000.What is the break-even point in dollar sales?

A CVP graph presents data on:

The break-even point is the sales level at which a company neither earns a profit nor incurs a loss.

Rudy Co.has total fixed costs of $520,000.A unit of product sells for $15 and variable costs per unit are $11. a)Prepare a contribution margin income statement showing predicted net income (loss)if Rudy Co.sells 100,000 units for the year ended December 31. b)At a minimum,how many units must Rudy Co.sell in order not to incur a loss?

Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300.Annual fixed costs are $990,000.Current sales volume is $4,200,000.Compute the break-even point in units.

Hiller Co.anticipates total fixed costs of $120,000 and variable costs equal to 40% of sales.What is the pretax income if sales are $650,000?