During the current year, XYZ Company increased its variable SG&A expenses while keeping fixed SG&A expenses the same. As a result, XYZ’s: Contribution margin and gross margin will be lower. Contribution margin will be higher, while its gross margin will remain the same. Operating income will be the same under both the financial accounting income statement and contribution income statement. Inventory amounts booked under the financial accounting income statement will be lower than under the contribution income statement. Under the contribution income statement, a company’s contribution margin will be: Higher if fixed SG& A costs decrease. Higher if variable SG& A costs increase. Lower if fixed manufacturing overhead costs decrease. Lower if variable manufacturing overhead costs increase.

During the current year, XYZ Company increased its variable SG&A expenses while keeping fixed SG&A expenses the same. As a result, XYZ’s: Contribution margin and gross margin will be lower. Contribution margin will be higher, while its gross margin will remain the same. Operating income will be the same under both the financial accounting income statement and contribution income statement. Inventory amounts booked under the financial accounting income statement will be lower than under the contribution income statement. Under the contribution income statement, a company’s contribution margin will be: Higher if fixed SG& A costs decrease. Higher if variable SG& A costs increase. Lower if fixed manufacturing overhead costs decrease. Lower if variable manufacturing overhead costs increase.

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Description: During the current year, XYZ Company increased its variable SG&A expenses while keeping fixed SG&A expenses the same. As a result, XYZ’s:Contribution margin and gross margin will be lower.Contribution margin will be higher, while its gross margin wil

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 2MC: If a company has three lots of products for sale, purchase 1 (earliest) for $17, purchase 2 (middle)...

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During the current year, XYZ Company increased its variable SG&A expenses while keeping fixed SGA expenses the same. As a result, XYZ’s: Contribution margin and gross margin will be lower. Contribution margin will be higher, while its gross margin will remain the same. Operating income will be the same under both the financial accounting income statement and contribution income statement. Inventory amounts booked under the financial accounting income statement will be lower than under the contribution income statement.
During the current year, XYZ Company increased its variable SG&A expenses while keeping fixed SG&A expenses the same. As a result, XYZ’s: a. Contribution margin and gross margin will be lower. b. Contribution margin will be higher, while its gross margin will remain the same. c. Operating income will be the same under both the financial accounting income statement and contribution income statement. d. Inventory amounts booked under the financial accounting income statement will be lower than under the contribution income statement.
Which of the following is true regarding the contribution margin ratio of asingle product company? a. As fixed expenses decrease, the contribution margin ratio increases b. The contribution margin ratio increases as the number of units sold increase c. The contribution margin ratio multiplied by the variable expense per unit equals thecontribution margin per unit d. If sales increase, the peso increase in net operating income can be computed bymultiplying the contribution margin ratio by the peso increase in sales
Which of the following is true regarding the contribution margin ratio of a single product company? As fixed expenses decrease, the contribution margin ratio increases. The contribution margin ratio multiplied by the variable expense per unit equals the contribution margin per unit. The contribution margin ratio increases as the number of units sold increases. If sales increase, the dollar increase in net operating income can be computed by multiplying the contribution margin ratio by the dollar increase in sales.
During the current year, the net sales of Ridgeway, Inc., were 10 percent below last year’s level. You should expect Ridge-way’s semivariable costs to: a. Decrease in total, but increase as a percentage of net sales.b. Increase in total and increase as a percentage of net sales.c. Decrease in total and decrease as a percentage of net sales.d. Increase in total, but decrease as a percentage of net sales.
NUBD Inc. ignored the effect of income taxes in its calculation of the sales volume needed to achieve a target profit of P1,000,000. If the company considers the impact of income taxes in its calculation, which of the following statements would be true? aTotal fixed cost will increase. bContribution margin per unit will decrease. cSales volume to reach an after-tax profit will increase. dSales price per unit will decrease.
Dulaney's Stores has posted the following yearly earnings and expenses. A) Dulaney's current profit margin is %?? Dulaney's current yearly ROA is %?? B)Suppose COGS and merchandise inventory were each cut by 10% The new pretax profit margin is %?? The new ROA is %?? Based on the current profit margin in part a., Dulaney would have to generate$ ?? in additional sales in order to have the same effect on pretax earnings as a 10% decrease in merchandise costs.
3-17 During the current year, XYZ Company increased its variable SG&A expenses while keeping fixedSG&A expenses the same. As a result, XYZ’s:a. Contribution margin and gross margin will be lower.b. Contribution margin will be higher, while its gross margin will remain the same.c. Operating income will be the same under both the financial accounting income statement and contributionincome statement.d. Inventory amounts booked under the financial accounting income statement will be lower than underthe contribution income statement.
For a certain company, the cost function for producing x items is C(x)=40x+200, and the revenue function for selling x items in R(x)=−0.5(x−80)2+3,200. The maximum capacity of the company is 110 items. The profit function P(x) is the revenue function R(x) (how much it takes in) minus the cost function C(x) (how much it spends). In economic models, one typically assumes that a company wants to maximize its profit, or at least make a profit!Assuming that the company sells all that it produces, what is the profit function?P(x)= Preview Change entry mode . Hint: Profit = Revenue - Cost as we examined in Discussion 3. What is the domain of P(x)?Hint: Does calculating P(x) make sense when x=−10 or x=1,000? The company can choose to produce either 40 or 50 items. What is their profit for each case, and which level of production should they choose?Profit when producing 40 items = Number Profit when producing 50 items = Number Can you explain, from our model, why the company makes less profit…
calculate the fixed and variable components of the selling and administrative expenses by dividing the change in cost of the selling and administrative expenses between 2009 and 2010 to change in sales between 2009 and 2010 and use it to determine the fixed and variable components of the cost of the selling and administrative expenses . Saunders Corporation (amounts in millions of dollars) 2009 2010 Sales 8,296 8,871 Cost of Goods Sold (5,890) (6,290) Selling and Administrative Expenses (1,788) (1,714) Operating Income before Income Taxes 618 867
Contribution Margin, Break-Even Sales, A chart used to assist management in understanding the relationships among costs, expenses, sales, and operating profit or loss.Cost-Volume-Profit Chart, Indicates the possible decrease in sales that may occur before an operating loss results.Margin of Safety, and A measure of the relative mix of a business's variable costs and fixed costs, computed as contribution margin divided by operating income.Operating Leverage Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: EstimatedFixed Cost Estimated Variable Cost(per unit sold) Production costs: Direct materials $22 Direct labor…
A projected income statement of Hailwork’s company for the coming year follows: Sales $506300 |Total Variable Cost 170865 Contribution Margin ? Total Fixed Cost 175000 Operating Income ? Compute contribution margin and contribution margin ratio Compute the Operating Income How much revenue must be earned in order to breakeven What is the effect on contribution margin ratio if the unit selling price and unit variable cost increase by 10 percent each?