Answered: Explain how a shift in the sales mix…

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Accounting

Explain how a shift in the sales mix could result in both a higher break-even point and a lower netincome.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 9Q: Explain what a sales mix is and how changes in the sales mix affect the break-even point.

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Explain what a sales mix is and how changes in the sales mix affect the break-even point.
If the sales mix in a multi-product environment shifts to a higher volume in low contribution margin products, the break-even point will ____________________________________ . A. remain unchanged because all products are included in the calculation of break-even B. increase because the low contribution margin products have little effect on break-even C. increase because the per composite unit contribution margin will decrease D. decrease because the per composite unit contribution margin will increase
In a cost-volume-profit analysis, explain what happens at the break-even point and why companies do not want to remain at the break-even point.
Would each of the following increase, decrease, or have an indeterminant effect on a firms break-even point (unit sales)? a. The sales price increases with no change in unit costs. b. An increase in fixed costs is accompanied by a decrease in variable costs. c. Variable labor costs decline; other things are held constant.
Explain how a shift in the sales mix could result in both a higher break-even point and a lower net operating income.
How would an increase in sales volume affect the break-even point and the margin of safety?
What is the break-even sales increase? Interpret.
Which of the following would lead to the breakeven point of a product shifting to the left on a traditional breakeven chart? A An increase in the selling price per unit B An increase in the variable costs of each unit C An increase in the level of fixed costs D A decrease in the selling price per unit
Why is it common to assume a fixed sales mix before finding the break even volume with multiple product?
How do you calculate the break-even point of sales?
Which tool can be used to easily calculate the change in profit resulting from a change in sales price, sales volume, variable costs, or fixed costs?
Which of the following is not an assumption underlying cost-volume-profit analysis? a.The break-even point will be passed during the period. b.Total sales and total costs can be represented by straight lines. c.Costs can be accurately divided into fixed and variable components. d.The sales mix is constant.