Question 1

Silver River Company sells Products S and T and has made the following estimates for the coming year:  Fixed costs are estimated at $202,400. For the purposes of break-even analysis, determine the following: 
a. Break-even sales (units) for E
b. Break-even sales (units) of S and T
c. Sales units of E necessary to realize an operating income of $119,600 for the coming year

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Question 2

Safari Co. sells two products: Orks and Zins. Last year, Safari sold 21,000 units of Orks and 14,000 units of Zins. Related data are as follows:  Determine the following: 
a. Safari Co.'s sales mix
b. Safari Co.'s unit selling price of E
c. Safari Co.'s unit contribution margin of E
d. Safari Co.'s break-even sales in units of E assuming that last year's fixed costs were $160,000

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Question 3

Cordell, Inc., has an operating leverage of 3. Sales are expected to increase by 9% next year. What is the expected change in operating income next year?

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Question 4

Trail Bikes, Inc. sells three Deluxe bikes for every seven Standard bikes. The Deluxe bike sells for $1,800 and has variable costs of $1,200. The Standard bike sells for $600 and has variable costs of $200.​
a. If Trail Bikes has fixed costs that total $1,702,000, how many bikes must be sold in order for the company to break even?
b. How many of the bikes determined in (a) will be Deluxe bikes, and how many will be the Standard bikes?

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Question 5

A business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of $240,000, a break-even point of $960,000, and operating income of $60,000 for the current year. Compute the current year's sales.

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Question 6

Define operating leverage. Explain the relationship between a company's operating leverage and how a change in sales is expected to impact profits.

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Question 7

If a business had a capacity of $10,000,000 of sales, actual sales of $6,000,000, break-even sales of $4,200,000, fixed costs of $1,800,000, and variable costs of 60% of sales, what is the margin of safety expressed as a percentage of sales?

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Quiz 20: Cost-Volume-Profit Analysis

Cordell, Inc., has an operating leverage of 3. Sales are expected to increase by 9% next year. What is the expected change in operating income next year?

A business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of $240,000, a break-even point of $960,000, and operating income of $60,000 for the current year. Compute the current year's sales.

Define operating leverage. Explain the relationship between a company's operating leverage and how a change in sales is expected to impact profits.

If a business had a capacity of $10,000,000 of sales, actual sales of $6,000,000, break-even sales of $4,200,000, fixed costs of $1,800,000, and variable costs of 60% of sales, what is the margin of safety expressed as a percentage of sales?