1. Explain why a contribution margin per unit becomes profit per unit above the breakeven point.
Q: Assume that a straight line on a CVP chart intersects the vertical axis at the level of fixed costs…
A: CVP Chart: Cost Volume Chart (CVP) chart refers to a graphical representation of the cost-volume…
Q: a. Calculate the productivity in terms of revenue per dollar of input. (R
A: Meaning of Productivity Productivity means the production of goods with high quality and also at a…
Q: Which of the following is called minimum point of production at which total cost is recovered:…
A: The margin of safety sales is calculated as difference between current sales and break even sales.
Q: True or false: The breakeven point in dollars can be computed by dividing the contribution margin…
A: Solution Concept Breakeven point is the point at which the contribution generated covers the fixed…
Q: 22. At the break-even point, fixed cost is aiways a. Equal to the contribution margin h. More than…
A: The Break-even point is the level of operation at which the company is in a no-profit / no loss…
Q: The break-even point in units using the weighted-average contribution margin is:
A: 1. Both the Questions are same. 2. Break Even Point is the situation where a business earns no…
Q: When the contribution margin per unit increases assuming all other factors remain constant. The…
A: Contribution margin per unit : The contribution margin is defined as the amount of which the sales…
Q: 5. Which of the following best describes a fixed cost? A. Increase proportionately with output. B.…
A: "Since you have asked multiple questions, we will solve first question for you. If you want any…
Q: a. What problems are associated with using the average cost per unit as a performance measure? b.…
A: Average cost per unit only rewards the manager for removing tasks or materials from the process…
Q: Break-even value using the contribution margin ratio
A: (Since you have posted a multi-part question, we will solve the first three parts for you. For the…
Q: Which of the following describes the behavior of the fixed cost per unit?
A: Fixed cost is the cost which is doesnt change gets effects with the change in production which means…
Q: d) Calculate the Contribution Margin. e) Calculate the Break Even Point (in quantity). f) Calculate…
A: Variable cost vary with the level of output where as fixed cost remain fixed. Total cost will…
Q: Which of the following describes the behavior of the fixed cost per unit? Group of answer choices…
A: Fixed cost is defined as the cost independent of the good produced or service rendered in an entity.…
Q: What is the effect of an increase in variable costs as a percentage of sales onthe contribution…
A: Variable cost refers to the cost which varies according to the volume of produced units. Increase in…
Q: when the contribution margin ratio increases
A: Option A is wrong because break-even point decreases when the contribution margin ratio increases.…
Q: On a CVP graph, the total cost line intersects the vertical (dollars) axis at the origin. the level…
A: Cost-Volume-Profit Analysis (CVP Analysis): CVP Analysis is a tool of cost accounting that measures…
Q: On a CVP graph, the total cost line intersects the vertical (dollars) axis at a. the origin. b. the…
A: Definition: Cost-volume profit analysis: CVP analysis is a tool of cost accounting that measures…
Q: Define ( a ) contribution margin, ( b ) contribution marginratio, and ( c ) average contribution…
A: Contribution margin helps management to determine the amount of sales revenue left after considering…
Q: The break-even point is that level of activity where a. total contribution margin equals the sum of…
A: At break-even point, there is no profit or no loss.
Q: 1. What is the controllable margin of each product? 2. What is the segment margin ofeach product? 3.…
A: The income statement can be prepared in many ways according to the determination of the net income.…
Q: What is the total variable cost per unit What is the total fixed cost What is the contribution…
A: Contribution margin per unit=Revenue per unit- Variable cost per unitRevenue per unit×100
Q: In the cost behavior equation, b*X denotes the variable cost per unit. Select one: O True O False
A: Cost behavior formula = a+ b*x
Q: What is the contribution margin per unit? contribution margin ratio? Unit sales at break even…
A: Hey, since there are multiple requirements posted, we will answer the first three requirements. If…
Q: QUESTION 1 Which of the following statements describes the behaviour of variable costs? O a. They…
A: Option a is correct.
Q: The term 'break even' point is defined as when: A. fixed costs equal total revenues B. variable…
A: The formula for calculating the break even point in units: Break Even Point (in Units)=Fixed…
Q: The breakeven point decreases it. O the variable cost per unit increases O the total fixed costs…
A: Break-even Point The Break-even point refers to the point of no gain or loss for the business. In…
Q: If a company makes two products , R1 and R2, what is the fomula for the weighted-average unit…
A: Contribution margin is the difference between sales revenue earned from a particular product and…
Q: Explain an example how to calculate contribution margin ratio.
A: Contribution margin ratio: Contribution margin ratio is the difference between the company’s sales…
Q: When using CVP Analysis, Net Profit (positive NI) would occur when Fixed Costs (FC) exceed total…
A: Net income as per CVP analysis - sales - variable cost = contribution contribution - fixed cost =…
Q: If Q equals the level of output, P is the selling price per unit, V is the variable cost per unit,…
A: Selling price: Selling price is a price set by the supplier at which he is ready to sell his goods…
Q: The “plus” in cost-plus pricing is often referred to as Markup. Extra profit. Gross profit.…
A: Cost plus pricing means when selling price is fixed as a addition of profit on the cost price. For…
Q: Define the term break-even point. What is the variable cost ratio? The contribution margin ratio?…
A: 1. Break-even point: It is a point where the total costs and the total sales of a company are said…
Q: a) What is the gross margin now? Gross margin b) What is the net operating income now? Net operating…
A: Solution Concept mathematically Gross margin = sales – cost of goods sold Net operating income…
Q: calculate contribution margin ratio, breakeven point in amount and breakeven point in units
A: Cost-volume-profit (CVP) analysis is a method of cost accounting that looks at the impact that…
Q: If the total contribution margin increases and fixed costs do not change, then net income can be…
A: The CVP or cost volume profit analysis helps in determining the effect of changes in the sales price…
Q: Which of the following describes the behavior of the fixed cost per unit? Decreases…
A: Fixed cost is the cost that remains constant irrespective of the level of production. Whereas…
Q: In cost-volume-profit analysis, what is the estimated profit at the break-even point?
A: Cost volume profit analysis is useful to find out the different sales volume on the basis of…
Q: What is happening to average costs when marginal cost is greater than average cost at a specific…
A: When marginal cost is greater than average cost (including average variable cost or average total…
Q: Explain how the unit contribution margin can be used todetermine the unit sales required to break…
A: The contribution per unit indicates the value left after deducting the variable cost from the sale…
Q: What effect does an increase in sales price have on contribution margin? An increase in fixed costs?…
A: Contribution Margin: The process or theory which is used to judge the benefit given by each unit of…
Q: Which of the following do not increase or decrease when the volume of production changes? O a. Fixed…
A: Some cost do not get affected by the volume of production. It remains same at all the levels of…
Q: Requirement 1. For each of the following independent situations, calculate the contribution margin…
A: Formula: Contribution Margin (per unit)= Sales per unit-variable cost per unit Break even points…
Q: What is the term used to describe costs that increase in steps? A. Variable costs B. Fixed costs…
A: Cost is referred as the essential part of the business or a company which looks after the costs such…
Q: What's the expected profit at break-even in a cost-volume-profit analysis
A: Introduction : The cost volume profit analysis examines the relationship between the variable and…
Q: a) average fixed cost, b) average variable cost, and c) total profit?
A: Markup Percentage = ((Selling Price - Cost)/Costs) * 100 Fixed and Variable cost - We know that…
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- Suppose a firm with a contribution margin ratio of 0.3 increased its advertising expenses by 10,000 and found that sales increased by 30,000. Was it a good decision to increase advertising expenses? Why is this simple problem an important one for businesspeople to understand?Suppose you are analyzing a firm that is successfully executing a strategy that differentiates its products from those of its competitors. Because of this strategy, you project that next year the firm will generate 6.0% revenue growth from price increases and 3.0% revenue growth from sales volume increases. Assume that the firms production cost structure involves strictly variable costs. (That is, the cost to produce each unit of product remains the same.) Should you project that the firms gross profit will increase next year? If you project that the gross profit will increase, is the increase a result of volume growth, price growth, or both? Should you project that the firms gross profit margin (gross profit divided by sales) will increase next year? If you project that the gross profit margin will increase, is the increase a result of volume growth, price growth, or both?Contribution Margin Ratio, Break-Even Sales, Operating Leverage Elgart Company produces plastic mailboxes. The projected income statement for the coming year follows: Required: 1. Compute the contribution margin ratio for the mailboxes. 2. How much revenue must Elgart earn in order to break even? 3. What is the effect on the contribution margin ratio if the unit selling price and unit variable cost each increase by 15%? 4. CONCEPTUAL CONNECTION Suppose that management has decided to give a 4% commission on all sales. The projected income statement does not reflect this commission. Recompute the contribution margin ratio, assuming that the commission will be paid. What effect does this have on the break-even point? 5. CONCEPTUAL CONNECTION If the commission is paid as described in Requirement 4, management expects sales revenues to increase by 80,000. How will this affect operating leverage? Is it a sound decision to implement the commission? Support your answer with appropriate computations.
- Sales Revenue Approach, Variable Cost Ratio, Contribution Margin Ratio Arberg Companys controller prepared the following budgeted income statement for the coming year: Required: 1. What is Arbergs variable cost ratio? What is its contribution margin ratio? 2. Suppose Arbergs actual revenues are 30,000 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement 3. How much sales revenue must Arberg earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer. 4. What is Arbergs expected margin of safety? 5. What is Arbergs margin of safety if sales revenue is 380,000?Jakarta Company is a service firm with current service revenue of $400,000 and a 40% contribution margin. Its fixed costs are $80,000. Maldives Company has current sales of $6,610,000 and a 45% contribution margin. Its fixed costs are $1,800,000. What is the margin of safety for jaka rta and Maldives? Compare the margin of safety in dollars between the two companies. Which is stronger? Compare the margin of safety in percentage between the two companies. Now, which one is stronger? Compute the degree of operating leverage for both companies. Which company will benefit most from a 15% increase in sales? Explain why. Illustrate your findings in an Income Statement that is increased by 15%.Hammond Company runs a driving range and golf shop. The budgeted income statement for the coming year is as follows. Required: 1. What is Hammonds variable cost ratio? Its contribution margin ratio? 2. Suppose Hammonds actual revenues are 200,000 greater than budgeted. By how much will before-tax profits increase? Give the answer without preparing a new income statement. 3. How much sales revenue must Hammond earn in order to break even? What is the expected margin of safety? (Round your answers to the nearest dollar.) 4. How much sales revenue must Hammond generate to earn a before-tax profit of 130,000? An after-tax profit of 90,000? (Round your answers to the nearest dollar.) Prepare a contribution margin income statement to verify the accuracy of your last answer.
- Marchete Company produces a single product. They have recently received the results of a market survey that indicates that they can increase the retail price of their product by 8% without losing customers or market share. All other costs will remain unchanged. Their most recent CVP analysis is shown. If they enact the 8% price increase, what will be their new break-even point in units and dollars?Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?Carpetland salespersons average 8,000 per week in sales. Steve Contois, the firms vice president, proposes a compensation plan with new selling incentives. Steve hopes that the results of a trial selling period will enable him to conclude that the compensation plan increases the average sales per salesperson. a. Develop the appropriate null and alternative hypotheses. b. What is the Type I error in this situation? What are the consequences of making this error? c. What is the Type II error in this situation? What are the consequences of making this error?
- Suppose a firm with a contribution margin ratio of 0.3 increased its advertising expensesby $10,000 and found that sales increased by $30,000. Was it a good decision to increaseadvertising expenses? Suppose that the contribution margin ratio is now 0.4. Would it bea good decision to increase advertising expenses?Peform a sensitivity analysis by answering the following questions: A. What is the break-even point in sales dollars for RBC? B. What is the margin of safety for RBC? C. What sales dollars would be required to achieve an operating profit of $170,000? $440,000?A service company has the following financial information (in millions of $)a. What is the profit leverage effect of reducing the cost of the facilitating goods in this company?b. It has been suggested that the in-house services costs could be reduced by 10 percent in the coming year by implementing lean systems. What effect would thisohave on earnings increase in percentage?c. What is the profit leverage effect of in-house services relative to profits?