Blaster, Inc. recently conducted a least-squares regression analysis to predict selling expenses. The company has constructed the following regression equation: Y = 339,000 + 8.30X. Which of the following statements is false if the primary cost driver is number of units sold? Multiple Choice a.) The company anticipates $339,000 of fixed selling expenses. b.) "Y" represents total selling expenses. c.) The company expects both variable and fixed selling expenses. d.) For each unit sold, total selling expenses will increase by $8.30. e.) "X" represents the number of

Blaster, Inc. recently conducted a least-squares regression analysis to predict selling expenses. The company has constructed the following regression equation: Y = 339,000 + 8.30X. Which of the following statements is false if the primary cost driver is number of units sold? Multiple Choice a.) The company anticipates $339,000 of fixed selling expenses. b.) "Y" represents total selling expenses. c.) The company expects both variable and fixed selling expenses. d.) For each unit sold, total selling expenses will increase by $8.30. e.) "X" represents the number of

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 8EA: Marchete Company produces a single product. They have recently received the results of a market...

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If a company has three lots of products for sale, purchase 1 (earliest) for $17, purchase 2 (middle) for $15, purchase 3 (latest) for $12, which of the following statements is true? A. This is an inflationary cost pattern. B. This is a deflationary cost pattern. C. The next purchase will cost less than $12. D. None of these statements can be verified.
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?
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?
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?
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Complete the following problems using the following ratios: Sales level at which operating income is zero o If sales above breakeven, then profit o If sales below breakeven, then loss o Fixed expenses = total contribution margin Total sales = total expenses Break Even Point: Unit…
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Isla Esme, Inc., sells tea products to various customers. In recent years, profits have been declining. The CFO of the business investigated the reasons for the profit decline and performed regression analysis for sales and costs. He determined that sales depend on product price, delivery speed, customer services, and marketing expenses. He also determined that total costs consist of variable costs of $25 per unit and fixed costs of $56,000. Marketing expenses have a coefficient of determination of 75% related sales.Question:If Isla Esme, Inc. produces 5000 units of output, what is the total cost?