Consider a situation in which a firm needs to make a decision regarding the resources to allocate between two products. One product makes a significantly larger contribution margin than the other. How might the contribution margin affect the decision that the firm makes? What if both contribution margins were positive or both were negative?  Are there other factors when considering the contribution margin you should look for?  What makes the contribution margin positive or negative?

Q: In deciding which product lines to emphasize when a production constraint exists, the company should…

A:

Q: Discuss how contribution margin can be maximized when one factor limits productive capacity.

A: In this question, we are taking the example of a small medical. Factors that would most likely to…

Q: “Management should always maximize sales of the product with the highest contribution margin per…

A: Yes, the given statement is correct.

Q: . What is the difference between variable and fixed costs? Also explain how the total variable cost…

A: " Since you have posted more than two questions and not specified which should be solved so we are…

Q: Break-even analysis is of limited use to management because a company cannot survive by just…

A: Breakeven analysis involves comparison of fixed cost, variable cost and sales price to derive the…

Q: Give an example of how a manager can decrease variable costs while increasing fixed costs?

A: Variable Cost: Variable costs are costs which are directly vary with the change in production.…

Q: Can a company use a target pricing model without a follow-on cost-savings sharing agreement? Why or…

A: Target price is the price at which the stock future price is estimated grounded on earnings…

Q: If a company is a multiproduct firm. a. can only utilize CVP analysis if the contribution margin…

A: c)  a multiproduct firm can earn a lower than expected profit though the total number of units sold…

Q: All other things the same, which of the following would be true of the contribution margin and…

A: The contribution margin is the part of sales revenue that remained after deducting the variable cost…

Q: What is the economic rationale for the cost approach? Under what conditions would the cost approach…

A: Answer: Economic rationale for cost approach: The cost approach means that the person who is…

Q: “Increasing the number of indirect-cost pools is guaranteed to sizably increase the accuracy of…

A: Indirect cost pool refers to the accumulated cost that jointly benefits two or more costs…

Q: Is this statement true or false? Can you please explain in detail. There is a difference between…

A: Firstly let us understand what is the theoretical production capacity is the optimum production…

Q: Which of the following would lead to the breakeven point of a product shifting to the left on a…

A: Break-even analysis is done in order to find out at what point the total cost will be equal to the…

Q: In a drop or continue decision, only the variable costs identified with a product are relevant in a…

A: The given statement is true.

Q: What are the two components that can affect the contribution margin? Why is it important to…

A: The two components that can affect contribution margin: 1) Number of units sold. 2) Price / cost per…

Q: If a firm operates at capacity, the minimum transfer price should be the: external market price any…

A: Solution: If a firm operates at capacity, the minimum transfer price should be the "external market…

Q: Michael Porter argues a firm cannot be at the same time a cost leader and a differentiator. Do…

A:

Q: How does Lean Production reduce or eliminate the difference in reported net operating income between…

A: Absorption Costing: Absorption costing is a method for calculating the full cost or total cost of a…

Q: Is activity-based costing always beneficial to an organization? in what situations would itb…

A: Activity based costing is a system of costing in which  allocated on the basis of activity done .it…

Q: When constrained by a limiting resource, managers often seek to produce those products which have:…

A: if a manager constrained by limiting resource, he can be to produce those products which have the…

Q: In your own words, explain what differential costs mean. How are fixed costs and variable costs…

A: The cost can be classified on the basis of nature variable or fixed. The variable cost are directly…

Q: Which of the following is the indicator of the rate at which company is earning profit? Select one:…

A: Ratio Analysis Each  items in the financial statements of an enterprise is compared by using ratio…

Q: When constrained by a limiting resource, managers often seek to produce those products which have:…

A: When constrained by some budget or limited sources managers often try to make products which lie in…

Q: Which tool can be used to easily calculate the change in profit resulting from a change in sales…

A: Cost-volume-profit analysis: Cost-Volume-Profit Analysis (CVP analysis), also commonly referred to…

Q: Give an example of how a manager can increase variable costs while decreasing fixed costs?

A: Fixed costs refers to those which do not change according to the change in units of productions.…

Q: How will relating product contribution margins to the amount of the constrained resource theyconsume…

A: Definition: Contribution Margin: The process or theory which is used to judge the benefit given by…

Q: Which one of the following statement is not correct? O Both fixed and variable costs influence…

A: The incorrect statement is "opoortunity costs are only considered when resources are limited" This…

Q: if we produce goods over the capacity, should we consider the fixed marketing cost and variable…

A: Fixed marketing costs is fixed costs related with the marketing of the product and this will not be…

Q: Profitability changes may be simply calculated by using what kind of tool: sales…

A: The net profits are calculated as difference between sales and total expenses.

Q: Which of the following occurs if a company experiences a decrease in its fixed costs? Select one: a.…

A: Break-even point: In the accounting term break-even point is a condition where the income or profit…

Q: What is the estimated selling price of a product less any costs necessary to further process the…

A: Solution: Net realization value = estimated selling price of a product - costs necessary to further…

Q: If a firm changes its activity level * all costs should change variable costs should change…

A: The answers for the multiple choice questions and relevant explanation are presented hereunder :…

Q: Which of the followings is not correct about cost-based pricing? Select one: a. Total fixed costs…

A: Cost based pricing is the method to set selling price based on the cost. To get selling price,…

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 statement is correct about cost-benefit analysis? O A. Costs and benefits…

A: Option A. Costs And Benefits Must Be Put Into Common Units (such As Dollars) If They Are To Be…

Q: What is the differential cost to produce product Zeta?

A: Given information is: Cost of producing Alpha = $23 per unit Additional cost of producing Zeta = $25…