If a company raises its target peso profit, its
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If a company raises its target peso profit, its
A. break-even point rises.
B. fixed costs increase.
C. required total contribution margin increases.
D. selling price rises
Step by step
Solved in 2 steps
- When sales price increases and all other variables are held constant, the break-even point will A. remain unchanged _________________________. B. increase C. decrease D. produce a lower contribution marginWhen sales price decreases and all other variables are held constant, the break-even point will _______________________. A. remain unchanged B. increase C. decrease D. produce a higher contribution marginSuppose 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?
- 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.Use the information from the previous exercises involving JJ Manufacturing to determine their break-even point in sales dollars.which of the following occurs if a company decreases its selling price per unit? a. net income increase b. more than one of the answers would occur c. contribution margin ration increase d. break even point increase e. contribution magrin increase
- 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 salesIf total fixed costs decreases while the sale price per unit and the variable costs per unit remainconstant, the:(A) contribution margin increases(B) contribution margin decreases(C) breakeven point increases(D) breakeven point decreases Which of the following would appear on both the budgeted income statement and on theschedule of expected cash disbursements for operating expenses?(A) Depreciation expense(B) Rent expense(C) Sales commission expense(D) Both B and C A business always absorbs its overheads on labour hours. In the 8th period 18,000 hours wereworked, actual overheads were $279,000 and there was$36,000 over-absorption. The overheadabsorption rate per hour was:(A) $15.50(B) $17.50(C) $18.00(D) $13.50If a company increases its sales price per unit for Product A, the new breakeven point will increase. decrease. remain the same. More information is needed.
- The effect on contribution margin ratio (CMR) and BEP of increasing sales price assuming it will not decrease unit sales would be: A. CMR - Increase; BEP - Decrease B. CMR - Decrease; BEP - Decrease C. CMR - Increase; BEP - No effect D. CMR - Decrease; BEP - No effect If a company increases its selling price by P2 per unit due to an increase in its variable labor cost of P2 per unit, the break-even point in pesos will: A. decrease B. increase C. not change D. change but direction is uncertainIf a company increases its selling price by P2 per unit due to an increase in its variable labor cost of P2 per unit, the break-even point in pesos will: A. decrease B. increase C. not change D. change but direction is uncertainWhich 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.
