Answered: Margin of safety is computed as Select…

Margin of safety is computed as Select one: O a. Contribution margin - Fixed costs O b. Breakeven sales - Variable costs *C. Actual sales - Breakeven sales O d. Actual sales-Contribution margin

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 11MC: When should a segment be dropped? A. only when the decrease in total contribution margin is less...

See similar textbooks

Related questions

Q: variable

A: Performance evaluation based on income could be best achieved by using variable costing method in…

Q: Which of the following is called minimum point of production at which total cost is recovered:…

A: The margin of safety sales is calculated as difference between current sales and break even sales.

Q: When pricing products and using cost-plus pricing, which type of cost is perceived to be the safest…

A: In absorption costing , fixed manufacturing overhead will be included in stock valuation where as in…

Q: The amount of a unit’s sales price that helps to cover fixed expenses is its ________.A.…

A: There are two type of costs being incurred in business. One is fixed costs and other is variable…

Q: The profit equation is: Multiple Choice (Unit price x Q) - (Unit variable costs x Q) - Total fixed…

Q: The margin of safety is equal to:

A: Financial accounting: Financial accounting is the process of recording, summarizing, and reporting…

Q: CVP analysis is most important for the determination of [A] sales revenue necessary to equal fixed…

A: Cost: It refers to the economic value incurred by the company for producing a product or service.

Q: The High- low method is used for? A. Profit planning B. Splitting mixed cost into fixed cost and…

A: A mixed cost contains a fixed portion of cost incurred even when the facility is idle, and a…

Q: Special order, opportunity cost. In order to determine whether a special order should be accepted at…

A: Opportunity Cost:Opportunity cost is total of potential income and other benefits that are lost due…

Q: Cost-volume-profit analysis favors either variable costing or absorption costs. Why?

A: The CVP analysis is used to analyse the impact of changes in variable cost and fixed cost on net…

Q: Select the correct statement concerning the cost-volume-profit graph at right: a. The point…

A: BEP: (Break-even point) It is the number of units that are sold that could result in a situation of…

Q: Show the effects oncontribution margin of changesin variable costs, fixed costs,selling price, and…

A: Cost-Volume-Profit (CVP) Analysis: It is a method followed to analyze the relationship between the…

Q: If the units produced exceed unit sales, which method would you expect to show the higher…

A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This…

Q: A favorable cost variance occurs when a. actual costs are the same as standard costs b. actual costs…

A: solution note Dear student as per the Q&A guideline we are required to answer the first question…

Q: The contribution margin ratio is calculated as: O a. The selling price per unit ratio /variable cost…

A: contribution margin is sales made less variable cost incurred is contribution margin

Q: Identify the formula that computes the degree of operating leverage (DOL).

A: The degree of operating leverage (DOL) measures how much the operating income of a company will…

Q: g) Briefly explain the impact of each of the following scenarios on the break-even point and the…

A: Margin of Safety(Amount) : Total Revenue-Breakeven point Margin of Safety(Units) : Current Sales…

Q: At the breakeven point Select one: a. Fixed costs will be equal to variable costs b. Sales will be…

A: Sales revenue: It is the revenue earned by a business on selling the goods or providing services to…

Q: Contribution margin is equal to [A] fixed cost - loss [B] profit + variable cost [C] sales - fixed…

Q: 22) Which of the following expressions can be used to calculate break-even sales revenue with the…

A: Break-even analysis is a technique used widely by production management. It helps to determine the…

Q: A changes in direct proportion to changes in the cost-driver level * mixed costs O fixed costs O…

A: If the change in cost and change cost driver level is of direct proportion, it is not fixed cost or…

Q: The break-even point is that level of activity where: Select one: O a. profit equals to zero. O b.…

A: Break-Even Point: It is the point of sales at which entity neither earns a profit nor suffers a…

Q: The ratio of contribution margin in dollars to the selling price is the: Select one: Oprofit margin.…

A: We know that, Contribution is sales - variable cost

Q: On the cost-volume-profit graph, the area between the total cost line and the sales line after the…

A: CVP analysis helps in determining the effect of variation in the costs on the profitability of an…

Q: Contribution margin is it Sales less cost of goods sold or Sales less all variable and fixed…

A: First of all: Sales less Cost of goods sold will give us the gross profit earned from sales. Sales…

Q: Margin of safety ratio is computed by dividing excess of actual or budgeted sales from break- even…

A: Margin of safety ratio = Profit ratio / Contribution margin ratio

Q: g) Briefly explain the impact of each of the following scenarios on the break-even point and the…

A: Margin of safety: The excess of actual sales over the break-even sales is known as margin of safety.…

Q: Which of the following is a correct definition of the margin of safety? The excess of contribution…

A: Margin of safety: Margin of safety is the point at which company makes profit. In other words Margin…

Q: When using CVP Analysis, Net Profit (positive NI) would occur when Fixed Costs (FC) exceed total…

A: Net income as per CVP analysis - sales - variable cost = contribution contribution - fixed cost =…

Q: The “plus” in cost-plus pricing is often referred to as Markup. Extra profit. Gross profit.…

A: Cost plus pricing means when selling price is fixed as a addition of profit on the cost price. For…

Q: Define the term break-even point. What is the variable cost ratio? The contribution margin ratio?…

A: 1. Break-even point: It is a point where the total costs and the total sales of a company are said…

Q: Contribution margin dividect by Income is the: Multiple Choice Contribution margin ratio. Margin of…

A: The break even sales are the sales where business earns no profit no loss during the period.

Q: How do you calculate Break-even Point? Select one: a. Fixed cost/ Contribution per unit b.…

A: Break-even point: The break-even point refers to a point where the total cost is equal to the total…

Q: A cost which remains constant per unit at various levels of activity is a Select one: a. mixed cost.…

A: Solution: A cost which remains constant per unit at various levels of activity is a "Variable cost".…

Q: T, F. In a make or buy short-run decision situation, the critical element to consider is whether the…

A: As posted multiple independent questions we are answering only first question kindly repost the…

Q: following Fixed costs, variable costs, sales, breakeven point value, safety threshold ratio

A: Given in the question: Sales 8500 Raw Materials 2350 Insurance 275 Loan…

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: At the breakeven point Select one: O a. Fixed costs will be equal contribution margin minus variable…

A: CVP analysis is done to measure the effect of change in the costs or outlays of the entity on its…

Q: The contribution margin ratio is calculated as: O a. The selling price per unit ratio / variable…

A: Contribution is the amount obtained after deducting the variable costs from the sales.

Q: The contribution margin ratio can be calculated in all of the following ways except: a.1 − Variable…

A: Contribution margin ratio is the difference total sales and total variable cost which is calculated…

Q: :On the cost-volume-profit graph, the intersection between the total cost line and (Y) axis…

A: The correct answer is The fixed cost amount. b

Q: In order to draw a basic break-even chart, which of the following information would you not require?…

A: The break even sales are the sales where business earns no profit no loss during the period. The…

Q: The margin of safety can be defined as the excess of budgeted sales over: break-even sales. net…

A: Cost-volume profit analysis: It can be defined as a cost accounting method that shows the impact of…

Q: Contribution Margin, Cost-Volume-Profit Analysis and Break-Even Point (Overview) Fixed, Variable…

A: -Variable cost refers to an expenditure that varies in gross dollar value as the degree of…

Q: Which of the following expressions can be used to calculate brcak-even sales revenue with the…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Question

based on the attached what is the answer?

Margin of safety is computed as,
Select one:
O a. Contribution margin-Fixed costs
O b. Breakeven sales- Variable costs
C. Actual sales - Breakeven sales
O d. Actual sales- Contribution margin

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The use of fixed costs to extract higher percentage changes in profits as sales activity changes involves a. margin of safety. b. unit contribution margin. c. degree of operating leverage. d. sensitivity analysis. e. variable cost reduction.
The contribution margin is the a. amount by which sales exceed total fixed cost. b. difference between sales and total cost. c. difference between sales and operating income. d. difference between sales and total variable cost. e. difference between variable cost and fixed cost.
For which cost concept used in applying (he cost-plus, approach to product pricing are fixed manufacturing costs, fixed selling and administrative expenses, and desired profit allowed for in determining the markup? A. Total cost B. Product cost C. Variable cost D. Standard cost
In the cost equation Y=a+bx, Y represents which of the following? A. fixed costs B. variable costs C. total costs D. units of production
Product costs under variable costing are typically: A. higher than under absorption costing B. lower than under absorption costing C. the same as with absorption costing D. higher than absorption costing when inventory increases
When should a segment be dropped? A. only when the decrease in total contribution margin is less than the decrease in fixed cost B. only when the decrease in total contribution margin is equal to fixed cost C. only when the increase in total contribution margin is more than the decrease in fixed cost D. only when the decrease in total contribution margin is less than the decrease in variable cost
Continuous improvement is the governing principle of a lean accounting system. Following are several performance measures. Some of these measures would be associated with a traditional standard-costing accounting system, and some would be associated with a lean accounting system. a. Materials price variances b. Cycle time c. Comparison of actual product costs with target costs d. Materials quantity or efficiency variances e. Comparison of actual product costs over time (trend reports) f. Comparison of actual overhead costs, item by item, with the corresponding budgeted costs g. Comparison of product costs with competitors product costs h. Percentage of on-time deliveries i. First-time through j. Reports of value- and non-value-added costs k. Labor efficiency variances l. Days of inventory m. Downtime n. Manufacturing cycle efficiency (MCE) o. Unused (available) capacity variance p. Labor rate variance q. Using a sister plants best practices as a performance standard Required: 1. Classify each measure as lean or traditional (standard costing). If traditional, discuss the measures limitations for a lean environment. If it is a lean measure, describe how the measure supports the objectives of lean manufacturing. 2. Classify the measures into operational (nonfinancial) and financial categories. Explain why operational measures are better for control at the shop level (production floor) than financial measures. Should any financial measures be used at the operational level? 3. Suggest some additional measures that you would like to see added to the list that would be supportive of lean objectives.
The margin of safety is equal to: a) Sales - (Fixed Costs/Contribution Margin Ratio) b) Sales - Net Income c) Sales - (Variable Costs/Contribution Margin) d) Sales - (Variable Costs + Fixed Costs)
On a CVP graph, the intersection of the sales revenue line and the total cost line is known as the: a. margin of safety point b. total cost point c. breakeven point d. unit contribution margin
Which of the following is a correct definition of the margin of safety? The excess of contribution margin over fixed costs The excess of gross margin over target income 0 The excess of sales revenue over the breakeven point The excess of ner income over all costs (both variable and fixed
The contribution margin ratio can be calculated in all of the following ways except: a.1 − Variable cost ratio. b.Contribution margin per unit / Price. c.Total contribution margin / Total sales. d.Fixed costs / Contribution margin ratio. e.All of these choices are correct. Total contribution margin divided by total sales is the: a.contribution margin ratio. b.sales ratio. c.target income. d.margin of safety. e.indifference point.
Contribution margin is a.the same as sales revenue b.the excess of sales over variable costs c.another term for volume in the "cost-volume-profit" analysis d.profit