Which of the following occurs if a company experiences a decrease in its fixed costs? Select one: O a. The contribution margin would increase. O b. The break-even point would decrease. O c. The contribution margin would decrease. O d. Income would increase. O e. More than one of the answers would occur.

Which of the following occurs if a company experiences a decrease in its fixed costs? Select one: O a. The contribution margin would increase. O b. The break-even point would decrease. O c. The contribution margin would decrease. O d. Income would increase. O e. More than one of the answers would occur.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question 14 Lees Corp. is deciding whether to keep or drop a small segment of its business. Key information regarding the segment include: Contribution margin: 30,000 Avoidable fixed costs: 35,000 Unavoidable fixed costs: 25,000 Given the information above, Lees should Group of answer choices Keep the segment because the contribution margin exceeds unavoidable fixed costs. Drop the segment because avoidable fixed costs exceed unavoidable fixed costs. Drop the segment because the contribution margin is less than avoidable fixed costs. Keep the segment because the contribution margin exceeds than total fixed costs.
All else being equal, a $10.00 increase in a product's variable expense per unit accompanied by a $10.00 increase in its selling price per unit will: Select one: O a. have no effect on the total contribution margin. b. have no effect on the contribution margin ratio. O c. None of the given answers. O d. increase the break-even volume. O e decrease the degree of operating leverage.
1. Find the break-even point in terms of dollars. 2. Find the margin of safety in terms of dollars. 3. The company is considering decreasing product K's unit sales to 80,000 and increasing product L's unit sales to 180,000, leaving unchanged the selling price per unit, variable expense per unit, and total fixed expenses. Would you advise adopting this plan? Indicate the advantage or disadvantage of the new plan over the current operations. Ex. YES 12345 ADVANTAGE or NO 12345 DISADVANTAGE
1.What is a cost whose total amount changes in direct proportion to a change in volume? mixed cost fixed cost irrelevant cost variable cost 2. Which of the following costs is an example of a fixed cost? delivery costs salary of plant manager direct materials sales commissions 3. If production increases by 15%, how will total variable costs likely react? remain the same decrease by 15% increase by 7.5% increase by 15% 4. Which of the following statements is TRUE with respect to fixed costs per unit? They will increase as production decreases They will decrease as production decreases They will remain the same as production levels change They will increase as production increases 5. Canine Company produces and sells dog treats for discriminating pet owners. The unit selling price is $10, unit variable costs are $7, and total fixed costs are $3,300. What are breakeven sales? $11,000 $4,714 $3,300 $7,700 6. Fixed Company produces a single product selling for $30 per unit. Variable costs…
A company can lower its break-even point by any of the following except by: Question 4Answer a. reducing its total fixed expenses b. increasing the selling price per unit c. increasing production d. increasing contribution margin
A company increased the selling price for its product from P1.00 to P1.10 a unit when total fixed costs increased from P400,000 to P480,000 and variable cost per unit remained unchanged. How would these changes affect the breakeven point? A. The breakeven point in units would be increased.B. The breakeven point in units would be decreased.C. The breakeven point in units would remain unchanged.D. The effect cannot be determined from the information given.
Encircle the followings: Which of the following is a definition of break-even point?a) The difference between the selling price of a product and the variable costs incurred in producing that productb) The fixed plus variable costs of the businessc) The situation where neither a profit nor a loss is maded) The situation where a profit is made If the contribution per unit is $25 and the breakeven point is 80,000 units. Which of the following statements could NOT be true? (Show Calculation) a) The selling price per unit is $55 and the variable cost per unit is $30b) The fixed costs are $2,000,000c) To make a profit of $300,000, 92,000 units would have to be soldd) To make a profit of $500,000, 95,000 units would have to be sold Which of the following is not an underlying assumption of break-even analysis?a) Costs can easily be divided into fixed and variable.b) Fixed costs remain static over a relevant range.c) The unit selling price will remain constant throughout the relevant…
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2 Question If cost is represented by C(x) = 1.8x + 10,000 and revenues are represented by R(x) = 8.5x, which equation could be used to find the break-even point? Select the correct answer below: O 6.7x O 6.7x= -10,000 O 8.5x = 1.8x - 10,000 O 10.3x = 10,000 - 1.8x + 10,000 8.52 = 1.8x +10,000
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(Please answer question 2) Management believes it can sell a new product for $8.50. The fixed costs of production are estimated to be $6,000, and the variable costs are $3.20 a unit. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Quantity Total Revenue Variable Costs Fixed Costs Total Costs Profits (Loss) 0 500 1,000 1,500 2,000 2,500 3,000 2. Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output. PQB = FC + VQB PQB - VQB = FC QB (P-V) = FC QB = FC P-V 3. What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if…
What is a cost whose total amount changes in direct proportion to a change in volume? mixed cost fixed cost irrelevant cost variable cost 2. Which of the following costs is an example of a fixed cost? delivery costs salary of plant manager direct materials sales commissions 3. If production increases by 15%, how will total variable costs likely react? remain the same decrease by 15% increase by 7.5% increase by 15% 4. Which of the following statements is TRUE with respect to fixed costs per unit? They will increase as production decreases They will decrease as production decreases They will remain the same as production levels change They will increase as production increases 5. Canine Company produces and sells dog treats for discriminating pet owners. The unit selling price is $10, unit variable costs are $7, and total fixed costs are $3,300. What are breakeven sales? $11,000 $4,714 $3,300 $7,700 6. Fixed Company produces a single product selling for $30 per unit. Variable costs…