Question 1

Refer to the figure above.The triangular area between the horizontal axis and Line A,to the left of 4,000,represents:

Accepted Answer

The answer of Refer to the figure above.The triangular area...

Question 2

Yellow Dot,Inc.sells a single product for $10.Variable costs are $4 per unit and fixed costs total $120,000 at a volume level of 10,000 units.What dollar sales level would Yellow Dot have to achieve to earn a target profit of $240,000?

Accepted Answer

To determine the dollar sales level needed to achieve a target profit of $240,000, we need to use the formula:

(Target Profit + Fixed Costs) / Contribution Margin Ratio = Dollar Sales Level

First, we need to calculate the contribution margin per unit.

Contribution margin = Selling price per unit - Variable cost per unit
Contribution margin = $10 - $4
Contribution margin = $6

Next, we can calculate the contribution margin ratio.

Contribution margin ratio = Contribution margin per unit / Selling price per unit
Contribution margin ratio = $6 / $10
Contribution margin ratio = 0.6 or 60%

Using the formula above:

($240,000 + $120,000) / 0.6 = Dollar Sales Level
$360,000 / 0.6 = $600,000

Therefore, Yellow Dot would need to achieve a dollar sales level of $600,000 to earn a target profit of $240,000. Therefore, the answer is C, $600,000.

Question 3

Narchie:

Accepted Answer

The answer of Narchie:
...

Question 4

Brooklyn sells a single product to wholesalers.The company's budget for the upcoming year revealed anticipated unit sales of 31,600,a selling price of $20,variable cost per unit of $8,and total fixed costs of $360,000.If Brooklyn's unit sales are 300 units more than anticipated,its break-even point will:

Accepted Answer

The break-even point is not affected by changes in unit sales.

Question 5

If Narchie sells 24,000 units,its safety margin will be:

Accepted Answer

To calculate the safety margin, we need to subtract the break-even point from the actual sales. As the question does not provide the fixed and variable costs, we cannot calculate the break-even point. Therefore, we cannot calculate the exact safety margin. However, we can eliminate options C, D, and E as they are very high and unrealistic values for the safety margin of selling only 24,000 units. Option B is also a high value but could be possible depending on the company's fixed and variable costs. Option A seems like the best choice as it is a more reasonable value for the safety margin of selling 24,000 units.

Question 6

Brooklyn sells a single product to wholesalers.The company's budget for the upcoming year revealed anticipated unit sales of 31,600,a selling price of $20,variable cost per unit of $8,and total fixed costs of $360,000.If Brooklyn's unit sales are 200 units less than anticipated,its breakeven point will:

Accepted Answer

The breakeven point is determined by fixed costs and contribution margin per unit, which do not change with a decrease in unit sales by 200.

Question 7

Wellcom Corporation has the following sales mix for its three products: A,20%;B,35%;and C,45%.Fixed costs total $400,000 and the weighted-average contribution margin is $100.How many units of product A must be sold to break-even?

Accepted Answer

Break-even sales in units = Fixed costs / Weighted-average contribution margin= $400,000 / $100= 4,000 unitsSince product A represents 20% of the sales mix, the number of units of product A that must be sold to break-even is:4,000 units * 20% = 800 units

Question 8

If a company desires to increase its safety margin,it should:

Accepted Answer

Stimulating sales volume can increase revenue and ultimately lead to a larger margin of safety for the company. The other options, such as increasing fixed costs or decreasing the contribution margin, may have the opposite effect by reducing profitability and increasing the risk of losses. Decreasing selling prices or raising the break-even point may also harm profitability and undermine the company's ability to absorb unexpected costs or fluctuations in demand. Therefore, the best choice to increase safety margin is to focus on boosting sales volume.

Question 9

Danielle sells a single product at $20 per unit.The firm's most recent income statement revealed unit sales of 100,000,variable costs of $800,000,and fixed costs of $400,000.If a $4 drop in selling price will boost unit sales volume by 20%,the company will experience:

Accepted Answer

Current revenue = 100,000 units x $20/unit = $2,000,000
Current total cost = $800,000 + $400,000 = $1,200,000
Current profit = $2,000,000 - $1,200,000 = $800,000

If the selling price drops by $4 and sales volume increases by 20%, the new sales volume would be:
100,000 units x 1.2 = 120,000 units

The new revenue would be:
120,000 units x $16/unit = $1,920,000

However, the total cost would remain the same:
$800,000 + $400,000 = $1,200,000

The new profit would be:
$1,920,000 - $1,200,000 = $720,000

The difference between the current profit and new profit is:
$800,000 - $720,000 = $80,000

Therefore, the company will experience an $80,000 drop in profit if they decrease the selling price by $4 and increase sales volume by 20%. Option C is the correct answer.

Question 10

Grime-X is studying the profitability of a change in operation and has gathered the following information: 
Should Grime-X make the change?

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The answer of Grime-X is studying the profitability of a...

Question 11

Brooklyn sells a single product to wholesalers.The company's budget for the upcoming year revealed anticipated unit sales of 31,600,a selling price of $20,variable cost per unit of $8,and total fixed costs of $360,000.Brooklyn's safety margin in units is:

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The answer of Brooklyn sells a single product to wholesalers.The...

Question 12

The weighted-average unit contribution margin is:

Accepted Answer

The answer of The weighted-average unit contribution margin is:
...

Question 13

All other things being equal,a company that sells multiple products should attempt to structure its sales mix so the greatest portion of the mix is composed of those products with the highest:

Accepted Answer

The contribution margin is the amount left over after subtracting the variable costs from the selling price of a product. This indicates how much each product contributes to covering the company's fixed costs and generating profit. Therefore, a company should aim to have a sales mix that is composed of products with higher contribution margins to maximize profitability.

Question 14

In order to produce a target profit of $22,000,Narchie's dollar sales must total:

Accepted Answer

We can use the formula for target profit to find out the dollar sales needed: 
Target Profit = (Dollar Sales x Target Profit %) - Fixed Costs 
$22,000 = (Dollar Sales x 100%) - $0 (assuming no fixed costs given) 
Dollar Sales = $22,000 / 100% = $220,000 
Therefore, the best choice is D, $1,055,000, since it is the only option that is above the necessary sales of $220,000.

Question 15

O'Dale sells three products: R,S,and T.Budgeted information for the upcoming accounting period follows. 
The company's weighted-average unit contribution margin is:

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The answer of O'Dale sells three products: R,S,and T.Budgeted information...

Question 16

Cleason sells a single product at $14 per unit.The firm's most recent income statement revealed unit sales of 80,000,variable costs of $800,000,and fixed costs of $560,000.Management believes that a $3 drop in selling price will boost unit sales volume by 20%.Which of the following correctly depicts how these two changes will affect the company's break-even point?

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The answer of Cleason sells a single product at $14...

Question 17

The difference between budgeted sales revenue and break-even sales revenue is the:

Accepted Answer

Safety margin represents the amount of sales revenue above the break-even point, which means the difference between budgeted sales revenue and break-even sales revenue is the safety margin. The contribution margin (A) is the difference between sales revenue and variable costs, the contribution-margin ratio (B) is the contribution margin as a percentage of sales, the target net profit (D) is the desired level of profit, and operating leverage (E) measures the degree of fixed costs in a company's cost structure.

Question 18

Each unit that Narchie sells will:

Accepted Answer

The variable cost per unit is 60% of $50, which is $30. Therefore, each unit sold at $50 minus the variable cost of $30 results in a contribution margin of $20 towards covering fixed costs and profit.

Question 19

A recent income statement of Dragonwood Corporation reported the following data: 
If the company desired to earn a target profit of $1,270,000,it would have to sell:

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The answer of A recent income statement of Dragonwood Corporation...

Question 20

Maxine's budget for the upcoming year revealed the following figures: 
If the company's break-even sales total $750,000,Maxine's safety margin would be:

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The answer of Maxine's budget for the upcoming year revealed...

Quiz 7: Cost-Volume-Profit Analysis