Answered: What information is conveyed by a…

Business

Accounting

What information is conveyed by a cost-volume-profit graph in addition to a company’s break-even point?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 4Q: In a cost-volume-profit analysis, explain what happens at the break-even point and why companies do...

See similar textbooks

Related questions

Q: Calculate the company's price earning ratio

A: Step 1 PE ratio is the ratio of earnings per share proportion to the market price per share.

Q: Prepare an analysis of the sales quantity and unit price factors did the price decrease generate…

A: Sales quantity factor = (Actual Quantity - planned Quantity) * Planned Sales Price Sales quantity…

Q: Which of the following statements is true regarding a company's segment margin? It is primarily used…

A: Solution: The true statement regarding a company's segment margin is that "It is primarily used to…

Q: What is Re-order quantity? What is Re-order level? What is Maximum stocklevel? With respect to…

A: Inventory management consist of various levels namely re-order level, re-order quantity, maximum and…

Q: What is Operating Profit Margin and how is it Calculated? What is a high quality of earnings?

Q: decision maker. What amount should Taylor report as segment profit?

A: Answer - P406,000 should be reported as segment profit for Taylor.

Q: What is the difference between Cost-Volume Profit graph and Profit-Volume graph?

A: Introduction:- Cost-Volume Profit graph displays the relationship between the cost of units…

Q: A graphic depiction of the break-even point is known as a cost-volume-profit (CVP) chart whereby the…

A: The representation of break even point in graphical form is said to be cost volume profit analysis.

Q: Why do many operating managers prefer a contribution income statement instead of a traditional…

A: Traditional income statement: Traditional income statement is a financial statement that shows the…

Q: What is the meaning of contribution margin ratio? How is this ratio useful in planning…

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: Describe the role that the mix of variable versus fixed costs has in the variation of earnings…

A: EBIT or earnings before interest and taxes is the company's net income before deducting the income…

Q: PROFITABILITY Solution and answer Interpretation Gross profit margin Operating profit margin Net…

A: Solution:- 1)Calculation of Gross profit margin as follows under:- Formula as follows under:-…

Q: Cost-volume-profit analysis (CVP Analysis) requires management to classify all costs as either…

A: Cost volume profit analysis (CVP Analysis) helps the business entity in determining the impact on…

Q: Is the cost of sales under weighted average always greater than the cost of sales in FIFO?

A: as FIFO method of inventory valuation goods purchased first will be used first or sold first. The…

Q: An examination of the accounting records a company disclosed a high contribution margin ratio and…

A: Contribution margin: It refers to money generated on incremental basis for each unit sold after…

Q: Calculate the profit margin ratio for each company.

A: We know that profit margin ratio is the percentage revenue that is left out to the entity after…

Q: How does the cost system affect the financial position of the firm?

A: Cost system is the system which is designed to evaluate the monitor the cost incurred by the…

Q: Why would a firm want to measure profits by segment and how would common costs be allocated to each…

A: Introduction: Common costs are company expenses that are shared by numerous departments. Common…

Q: Why does the sales value at splitoff method use the sales value of the total production in the…

A: Split-off Point: Split-off point is the point in production process where joint products are capable…

Q: Gross profit variance analysis can be used to study the effect of:" Changes in cost of goods sold on…

A: Gross profit variance refers to the variance that occurred to the amount of gross profit from the…

Q: Which product line has the highest gross profit %? Which product line has the highest net income %?

Q: Cost-volume-profit-analysis can be used to determine expected income from predicted sales and cost…

A: Cost volume profit analysis - generally cost volume profit analysis is used to determine the…

Q: Question 1 On the cost-volume-profit graph, the area between the total cost line and the sales line…

A: Cost-volume-price (CVP) analysis is a way to find out how changes in variable and fixed costs affect…

Q: What is a company’s cost structure? How can cost structure affect a company’s profits?

A: Company's cost structure expresses the proportion of fixed costs to variable cost. Cost structure…

Q: How does targeted profit enter into the break-even units equation?

A: Every organisation desires to attain certain target profit. Therefore the organisation makes an…

Q: Bulldogs Inc. wants to determine the impact of the change in selling price of its sole product in…

A: Sales price variance is the difference between the actual and standard/Budgeted selling price of…

Q: What factors affecting ROI does the DuPont method of profitability analysis highlight?

A: DuPont method of Profitability Analysis: According to DuPont method of Profitability Analysis,…

Q: The amount by which a company's sales can decline before losses are incurred is called the: degree…

A: Cost-Volume-Profit (CVP) analysis is a management tool which establishes the relationship between…

Q: Compute NET Profit margin ratio

A: Net profit margin ratio = Net Income/ Revenue * 100

Q: In cost-volume-profit analysis, what is the estimated profit at the break-even point?

A: Cost volume profit analysis is useful to find out the different sales volume on the basis of…

Q: What does the term sales mix mean? How is a weighted-average unit contribution margin computed?

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

Q: Operating leverage measures the: Change in profit when sales changes. Change in Contibution when…

A: Solution: Operating leverage = Contribution margin / Net income Therefore Operating leverage…

Q: In a cost-volume-profit analysis, explain what happens at the break-even point and why companies do…

A: Break-even point: It is that point in the business when all its costs have been recovered.…

Q: Gross profit variance analysis can be used to study the effect of: a. Changes in cost of goods…

A: Gross profit is the gross income/revenue left after deducting the cost of goods sold from the net…

Q: What's the expected profit at break-even in a cost-volume-profit analysis

A: Introduction : The cost volume profit analysis examines the relationship between the variable and…

Q: se all the Cost-Volume-Profit related applications to analyse the company and then determine the…

A: Cost Volume Profit Analysis: Profit is the excess of income over expenditure during given period of…

Q: Which of the following equations can be used to compute a firm’s magnitude of operating leverage?…

A: In terms of accountancy, degree (magnitude) of operating leverage (DOL) can be defined as the ratio…

Question

What information is conveyed by a cost-volume-profit graph in addition to a company’s break-even point?

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 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

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.
Explain how a contribution margin income statement can be used to determine profitability.
The measurement of earnings concept that consists of a companys profit from operations after taxed are subtracted is ________. A. ROI B. EPS C. EBITDA D. NOPAT
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.
Is there a point in a cost-volume-profit analysis when the company is expected to profit?
. A company can use cost-volume-profit analysis to determine the level of sales required to earn a target profit. TRUE OR FALSE
How much is the net operating income contributed to the company by Department A and B? Using the data above, what is the segment margin of Department A and B?
What analysis ensures that the income for the firm will cover its variable costs? a. ratio analysis b. financial analysis c. cost volume profit analysis d. sales analysis
Which one of the following is defined, at any given sales volume, as the ratio of the total contribution margin to operating profit at that sales volume?
Which of the following is the indicator of the rate at which company is earning profit? Select one: a. Margin of safety b. All options are correct c. Contribution margin d. Profit volume ratio
Gross profit variance analysis can be used to study the effect of: a. Changes in cost of goods sold on a company's profitability. b. Changes in selling prices on a company's profitability. c. Changes in volume of goods sold on a company's profitability. d. All of the choices. Changes in product sales mix on a company's profitability.
In evaluating the profit center manager, the operating income should be compared a.across profit centers b.to the competitor's net income c.to the total company earnings per share d.to a budget