In determining the number of Break Even (B-E) units to sell in order to obtain the amount of Breakeven dollars, the equation would show Fixed Costs per unit divided by Contribution Margin (CM) per unit. TRUE FALSE

In determining the number of Break Even (B-E) units to sell in order to obtain the amount of Breakeven dollars, the equation would show Fixed Costs per unit divided by Contribution Margin (CM) per unit. TRUE FALSE

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 1QTD

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In determining the number of Break Even (B-E) units to sell in order to obtain the amount of Breakeven
dollars, the equation would show Fixed Costs per unit divided by Contribution Margin (CM) per unit.
TRUE
FALSE

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Break-even for a multiple product firm. can be calculated by dividing total fixed costs by the contribution margin of a composite unit can be calculated by multiplying fixed costs by the contribution margin ratio of a composite unit can only be calculated when the proportion of products sold is the same for all products can be calculated by multiplying fixed costs by the contribution margin ratio of the most common product in the sales mix
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The amount of a units sales price that helps to cover fixed expenses is its ____________________. A. contribution margin B. profit C. variable cost D. stepped cost
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Please explain this statement thoroughly. "To estimate what the profit will be at various levels of activity, multiply the number of units to be sold above or below the break-even point by the unit contribution margin."
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The break-even point can be calculated with the following formula: Total fixed expenses / (Variable cost per unit Selling price per unit)TRUEFALSE
The break-even point in unitsis calculated as (fill in the blank) divided by the Contribution Margin in Units. (See your Chapter 20 notes, page 13) Total sales revenue Sales revenue per unit Total variable costs Fixed cost per unit Variable cost per unit Total fixed costs Contribution margin ratio
To calculate the sales dollars necessary to achieved a desired profit level, the sum of fixed costs plus desired prof it is divided by contribution margin weighted average unit contribution margin contribution margin ratio unit sales price minus unit contribution margin
True or false: The breakeven point in dollars can be computed by dividing the contribution margin into the fixed operating costs.
A break-even chart has been set up to show the current break-even point. Due to an increase in the price of raw materials, the variable cost per unit has increased. Assume all other costs and the selling price per unit remains constant. How does this change in the variable cost per unit affect the break-even chart?