Suppose sales volume increase by the same percentage for Company X and Company Y.  Use CVP analysis to explain which company will experience a larger percentage  increase in profits?  Company X - Dominated by fixed expenses; or  Company Y - Dominated by variable expenses.

Q: Changes in sales cause changes in profits. Would the profit change associated with sales changes be…

A: Introduction: Operating leverage refers to the application of both fixed and variable costs to make…

Q: 1. Compute the companywide break-even point in dollar sales. 2. Compute the break-even point in…

A: Break even point is the point of sales level where company will incur no loss or no profit which…

Q: Assuming that the net sales and profit remain the same, a company's return on investment would * A O…

A:

Q: Why was the increase in FCI's operating income so much greater than the increase in its net sales?

A: Operating income: Operating income measures the organization's profitability (includes all incomes…

Q: The ratio which indicates the profit that a company makes after paying variable costs of production…

A: Variable costs are those costs which changes with change in level of activity like all operating…

Q: Observe the net income for both companies. Which company is more profitable? Which company is more…

A: Solution:- Observation of net income for both companies as follows under:- Company 2010 2009 2008…

Q: 1. Evaluate the below statements: Operating leverage refers to the ability of the firm to operate at…

A: Operating leverage measures the impact of change on operating income due to the change in revenues.…

Q: When sales volume increases, which company will experience a larger percentage increase in profit:…

A: Cost Volume Profit Analysis (CVP Analysis): This analysis is helpful in determining that how any…

Q: On a CVP graph for a profitable company, the total revenue (sales) line will be steeper than the…

A: Cost volume profit analysis: It can be defined as the technique of accounting that is used by the…

Q: The degree of operating leverage Select one: O a. can be computed by dividing total contribution…

A: Leverage is the risk that a company bears.

Q: Segment Contribution Margin Analysis The operating revenues of the three largest business segments…

A: a) Compute the contribution margin and the contribution margin ratio:

Q: Does an increase in the operating profitability ratio always causean increase in the value of…

A: Answer: Usually, company’s operating profitability ratio’s measure how far management will strive to…

Q: For each of the following cases, state whether the statement is true for LIFO or for FIFO. Assume…

A: when inventory costs are rising, LIFO uses most recent purchases, which increases cost of good sold,…

Q: 1. The required sales in units to achive a target net income is? 2. What is the key factor in…

A: Contribution margin is the difference between sales revenue earned from a particular product and…

Q: What analysis ensures that the income for the firm will cover its variable costs?    a. ratio…

A: Companies need to analyse how many products to sell or how much sales to make in a financial year to…

Q: Suppose a company’s return on invested capital is less than itsWACC. What happens to the value of…

A: When the company’s ROIC is below the WACC, it indicates that the value is destroyed because the…

Q: a) What is Siam Square's return on sales ratio and when compared to its competitors how is Siam…

A: Return on sales is the measure of profits earned by the company. It is also called operating profit…

Q: Show with a formula that describes the average estimatesustainable sales growth. Then, make a clear…

A: Sustainable growth means Growth for the future customers such as petroleum industries advertise…

Q: eases its selling price by 15%?” Discuss the following under CVP analysis (present graphical…

A: a) Hello thank you for the question. As per guidelines, we would provide only one answer at a time.…

Q: True or False If one is to compare two companies that have different growth rates, he must utilize…

A: Relative valuation multiples are used to compare the value of companies operating within the same…

Q: A manager who wants to determine the percentage impact on income of a given percentage change in…

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

Q: Assume BGL Enterprises increases its operating efficiency by lowering its costs while holding its…

A: Return on equity is the rate of return earned by the company on its equity capital. The return on…

Q: Help question 28

A: Operating leverage: It is a financial ratio that measures a company’s operating income to its sales…

Q: Which of the following statements is true? OA. When a large proportion of income is spent on a…

A: To find: which of the following statement is true

Q: Please select the option that best analyzes the PROFIT MARGIN for our example company.   The profit…

A: Profit margin is the percentage of sales, which explains how much profit a firm can earn for…

Q: In all respects, Company A and Company B are identical except that Company A’s costs are mostly…

A:

Q: If a firm decreases its operating costs, all else constant, then the: A. profit margin will…

A: Price-to-Earnings (P/E) Ratio is computed by dividing the market price of share/stock by its…

Q: A profit-volume graph differs from a cost-volume-profits graph in that a profit-volume graph…

A: "Since you have asked multiple questions, we will solve first question for you. If you want any…

Q: Which of the following statement is CORRECT about the foundational assumption used in CVP analysis.…

A: CVP analysis means the cost-volume profit analysis. This analysis in cost management is done to have…

Q: Which of the following is the indicator of the rate at which company is earning profit? Select one:…

A: Ratio Analysis Each  items in the financial statements of an enterprise is compared by using ratio…

Q: the following best explains the difference between the two points on the graph? * Q O The area of…

A: The cost volume profit analysis is performed to represent the effect of different cost on Income and…

Q: Is there a point in a cost-volume-profit analysis when the company is expected to profit?

A: Is there a point in a cost-volume-profit analysis when the company is expected to profit? Answer:…

Q: On a CVP graph for a profitable company, the total revenue (sales) line will be steeper than the…

A: The graphical representation of the cost-volume benefit analysis is a cost volume profit graph, also…

Q: On the cost-volume-profit graph, which of the following would result into a decrease in the…

A: CVP analysis: This analysis helps to evaluate how the changes made in cost and volume do affect the…

Q: 15 - If a company's EBIT margin is increasing while its net profit margin is decreasing, which of…

A: EBIT: It is the number of earnings before interest and tax of the organization. It includes all the…

Q: 6- If a company's EBIT margin is increasing while its net profit margin is decreasing, which of the…

A: First we need to define both terms so that we can answer this question. Earning Before Interest and…

Q: To maximize profits, firms produce the level of output that: O a. equates total revenue and total…

A: The output levels achieve highest efficiency and peak profits when marginal revenue is on par or…

Q: If total costs remain the same, the smaller the proportion of fixed costs in a firm's cost structure…

A: Under Marginal costing (variable costing) contribution percentage or contribution per unit of…

Q: Observe the net income for both companies. Which company is more profitable? Which company is more…

A: Net income is defined as gross profit minus any other expenses and costs, as well as any other…

Q: Questions: Does a low return on sales indicate a weak company? (Y/N). Explain your answer. Do…

A: Multi Step statement of comprehensive income shows all incomes and all expenses of the business at…

Q: Which of the following is true regarding the contribution margin ratio of a single product company?

A: Contribution Margin: It is defined as the difference between the sales and the variable cost.…

Q: On the cost-volume-profit graph, which of the following would result into an increase in the…

A: The Break-even point is the point where all the sales generated by the company are equal to the cost…

Q: Change in operating income = change in sales dollars x contribution margin What is the equation for…

A: The Sales, Contribution Margin, Variable costs are the components of CVP Analysis. The analysis is…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.