Question 1

If the breakeven point is 1,000 units and each unit sells for $50,then ________.
A) selling 1,040 units will result in a loss
B) selling $60,000 will result in a loss
C) selling $50,000 will result in zero profit
D) selling $45,000 will result in profit

Accepted Answer

The breakeven point is where the revenue equals the total cost, resulting in zero profit.

Given that the breakeven point is 1,000 units and each unit sells for $50, the total revenue at breakeven is:
1,000 units x $50/unit = $50,000

Therefore, selling $50,000 worth of units will result in zero profit, which is option C.

Selling 1,040 units will exceed the breakeven point and should result in a profit, so option A is incorrect.

Selling $60,000 worth of units would result in a loss since the total cost at breakeven for 1,000 units is not disclosed, so option B is incorrect.

Similarly, selling $45,000 worth of units would not reach the breakeven point and would result in a loss, so option D is incorrect.

Question 2

Assume only the specified parameters change in a CVP analysis.The contribution margin percentage increases when ________.
A) total fixed costs increase
B) total fixed costs decrease
C) variable costs per unit increase
D) variable costs per unit decrease

Accepted Answer

When variable costs per unit decrease, the contribution margin per unit increases, thus increasing the contribution margin percentage.

Question 3

Answer the following questions using the information below:
Star Jewelry sells 500 units resulting in $75,000 of sales revenue, $28,000 of variable costs, and $18,000 of fixed costs.
-Breakeven point in units is ________.
A) 196 units
B) 203 units
C) 185 units
D) 192 units

Accepted Answer

The answer of Answer the following questions using the information...

Question 4

The breakeven point is the activity level where ________.
A) revenues equal fixed costs
B) revenues equal variable costs
C) contribution margin equals total costs
D) revenues equal the sum of variable and fixed costs

Accepted Answer

Revenue - Variable Costs - Fixed Costs = Operating income, thus;
Revenue = Variable Costs + Fixed Costs

Question 5

Answer the following questions using the information below:
Star Jewelry sells 500 units resulting in $75,000 of sales revenue, $28,000 of variable costs, and $18,000 of fixed costs.
-The number of units that must be sold to achieve $40,000 of operating income is ________.
A) 677 units
B) 717 units
C) 617 units
D) 650 units

Accepted Answer

The answer of Answer the following questions using the information...

Question 6

What is the breakeven point in units,assuming a product's selling price is $100,fixed costs are $16,000,unit variable costs are $20,and operating income is $5,200?
A) 100 units
B) 300 units
C) 400 units
D) 200 units

Accepted Answer

Breakeven point in units = Fixed costs / (Selling price per unit - Variable cost per unit)= 16,000 / (100 - 20)= 16,000 / 80= 200 units

Question 7

At breakeven point,________.
A) operating income is equal to zero
B) contribution margin minus fixed costs is equal to profits earned
C) revenues equal fixed costs minus variable costs
D) breakeven revenues equal fixed costs divided by the variable cost per unit

Accepted Answer

At the breakeven point, a business's operating income is zero because its total revenues are exactly equal to its total costs (both fixed and variable).

Question 8

Contribution margin per unit is a useful tool for calculating contribution margin and operating income.

Accepted Answer

Contribution margin per unit is a key measure used to determine the profitability of a product or service. It is calculated by deducting variable costs from revenue for each unit sold. By using this measure, businesses can determine the amount of revenue generated from each unit sold that goes towards covering fixed costs and contributing to operating income. Therefore, contribution margin per unit is an important tool for calculating contribution margin and operating income.

Question 9

Winnz sells 8,000 units resulting in $100,000 of sales revenue,$35,000 of variable costs,and $45,000 of fixed costs.To achieve $150,000 in operating income,sales must total ________.
A) $440,000
B) $160,000
C) $130,000
D) $300,000

Accepted Answer

The answer of Winnz sells 8,000 units resulting in $100,000...

Question 10

At the breakeven point of 2,000 units,variable costs total $4,000 and fixed costs total $6,000.The 2,001st unit sold will contribute ________ to profits.
A) $1
B) $2
C) $3
D) $5

Accepted Answer

The contribution margin per unit can be calculated as follows:
Contribution margin per unit = Price per unit - Variable cost per unit
Since we know that at the breakeven point, 2,000 units are sold and variable costs total $4,000, we can calculate the variable cost per unit as follows:
Variable cost per unit = Total variable costs / Number of units
Variable cost per unit = $4,000 / 2,000 units = $2 per unit
We also know that at the breakeven point, fixed costs total $6,000. Therefore, the total cost at the breakeven point is:
Total cost = Total fixed costs + Total variable costs
Total cost = $6,000 + $4,000 = $10,000
Since the breakeven point is 2,000 units, the price per unit can be calculated as follows:
Price per unit = Total revenue / Number of units
Price per unit = Total cost / Number of units
Price per unit = $10,000 / 2,000 units = $5 per unit
Using this information, we can calculate the contribution margin per unit as follows:
Contribution margin per unit = Price per unit - Variable cost per unit
Contribution margin per unit = $5 - $2 = $3 per unit
Therefore, for the 2,001st unit sold, the contribution to profits would be $3.

Question 11

How many units would have to be sold to yield a target operating income of $23,000,assuming variable costs are $25 per unit,total fixed costs are $2,000,and the unit selling price is $30?
A) 4,800 units
B) 4,400 units
C) 5,000 units
D) 5,200 units

Accepted Answer

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

Contribution margin per unit = Selling price per unit - Variable cost per unit 
Contribution margin per unit = $30 - $25 = $5

Next, we use the contribution margin per unit to calculate the break-even point in units:

Break-even point (in units) = Total fixed costs / Contribution margin per unit 
Break-even point (in units) = $2,000 / $5 = 400 units

To calculate the units needed to achieve a target operating income of $23,000, we use the following formula:

Units sold = (Fixed costs + Target operating income) / Contribution margin per unit 
Units sold = ($2,000 + $23,000) / $5 = 5,000 units

Therefore, the answer is C) 5,000 units.

Question 12

Breakeven point in units is ________.
A) total costs divided by profit margin per unit
B) contribution margin per unit divided by total cost per unit
C) fixed costs divided by contribution margin per unit
D) the sum of fixed and variable costs divided by contribution margin per unit

Accepted Answer

The breakeven point in units is the fixed costs divided by the contribution margin per unit. This formula calculates the number of units that need to be sold in order to cover all fixed costs and direct costs associated with producing the product. Option A is incorrect because dividing total costs by profit margin per unit gives you the number of units required to earn a certain level of profit, not the breakeven point. Option B is incorrect because it calculates the unit contribution margin and total cost per unit, but doesn't relate them to the fixed costs. Option D is incorrect because it calculates the total cost, rather than the fixed costs, and doesn't relate it to the contribution margin per unit.

Question 13

The breakeven point revenues is calculated by dividing ________.
A) fixed costs by total revenues
B) fixed costs by contribution margin percentage
C) total revenues by fixed costs
D) contribution margin percentage by fixed costs

Accepted Answer

The breakeven point revenues are calculated by dividing fixed costs by contribution margin percentage. This calculation shows the minimum amount of revenue that a company needs to generate to cover its fixed costs and break even.

Question 14

Sky High sells helicopters.During the current year,100 helicopters were sold resulting in $820,000 of sales revenue,$250,000 of variable costs,and $342,000 of fixed costs.Breakeven point in units is ________.
A) 80 units
B) 64 units
C) 60 units
D) 78 units

Accepted Answer

The breakeven point in units is calculated by dividing the total fixed costs by the contribution margin per unit. The contribution margin per unit is the sales price per unit minus the variable cost per unit. Here, the sales price per unit is $8,200 ($820,000/100), and the variable cost per unit is $2,500 ($250,000/100). The contribution margin per unit is $5,700 ($8,200 - $2,500). The breakeven point is $342,000 / $5,700 = 60 units.

Question 15

If unit outputs exceed the breakeven point ________.
A) there will be an increase in fixed costs
B) total sales revenue will exceed fixed costs
C) total sales revenue will exceed variable costs
D) there will be a profit

Accepted Answer

The answer of If unit outputs exceed the breakeven point...

Question 16

Sky High sells helicopters.During the current year,100 helicopters were sold resulting in $820,000 of sales revenue,$250,000 of variable costs,and $342,000 of fixed costs.The number of helicopters that must be sold to achieve $300,000 of operating income is ________.
A) 113 units
B) 102 units
C) 96 units
D) 100 units

Accepted Answer

First, we need to calculate the contribution margin per unit:
Contribution Margin per unit = Sales Price per unit - Variable Cost per unit
Contribution Margin per unit = ($820,000/100) - ($250,000/100)
Contribution Margin per unit = $5,700

Next, we can use the following formula to calculate the breakeven point in units:
Breakeven Point in Units = Fixed Costs / Contribution Margin per unit
Breakeven Point in Units = $342,000 / $5,700
Breakeven Point in Units = 60 units

To calculate the number of helicopters needed to achieve $300,000 of operating income, we can use the following formula:
Operating Income = (Number of Units Sold x Contribution Margin per unit) - Fixed Costs
$300,000 = (Number of Units Sold x $5,700) - $342,000
Number of Units Sold = 112.28

Therefore, the number of helicopters that must be sold to achieve $300,000 of operating income is approximately 113 units. The best choice is A.

Question 17

The breakeven point decreases if ________.
A) the variable cost per unit increases
B) the total fixed costs decrease
C) the contribution margin per unit decreases
D) the selling price per unit decreases

Accepted Answer

The breakeven point is the point at which total revenue equals total cost. Fixed costs do not change with changes in production, so if total fixed costs decrease, the breakeven point will decrease as well.

Question 18

The difference between total revenues and total variable costs is called contribution margin.

Accepted Answer

This is correct. Contribution margin is the amount of money left over after the variable costs have been subtracted from the total revenues. It is a measure of the amount that each unit sold contributes towards covering fixed costs and generating profits.

Question 19

Arthur's Plumbing reported the following:
 $$\begin{array} { l r } 
\text { Revenues } & \$ 4,500 \
\text { Variable manufacturing costs } & \$ 900 \
\text { Variable nonmanufacturing costs } & \$ 810 \
\text { Fixed manufacturing costs } & \$ 630 \
\text { Fixed nonmanufacturing costs } & \$ 545
\end{array}$$ Required:
a.Compute contribution margin.
b.Compute contribution margin percentage.
c.Compute gross margin.
d.Compute gross margin percentage.
e.Compute operating income.

Accepted Answer

The answer of Arthur's Plumbing reported the following:
 \[\begin{array} {...

Question 20

Sales total $400,000 when variable costs total $300,000 and fixed costs total $50,000.The breakeven point in sales dollars is ________.
A) $200,000
B) $120,000
C) $170,000
D) $210,000

Accepted Answer

The breakeven point in sales dollars is calculated as Fixed Costs / (1 - Variable Cost Ratio). The Variable Cost Ratio is $300,000 / $400,000 = 0.75. So, the breakeven point is $50,000 / (1 - 0.75) = $200,000.

Quiz 3: Cost-Volume-Profit Analysis

If the breakeven point is 1,000 units and each unit sells for $50,then ________.

Assume only the specified parameters change in a CVP analysis.The contribution margin percentage increases when ________.

Answer the following questions using the information below: Star Jewelry sells 500 units resulting in $75,000 of sales revenue, $28,000 of variable costs, and $18,000 of fixed costs. -Breakeven point in units is ________.

The breakeven point is the activity level where ________.

Answer the following questions using the information below: Star Jewelry sells 500 units resulting in $75,000 of sales revenue, $28,000 of variable costs, and $18,000 of fixed costs. -The number of units that must be sold to achieve $40,000 of operating income is ________.

What is the breakeven point in units,assuming a product's selling price is $100,fixed costs are $16,000,unit variable costs are $20,and operating income is $5,200?

At breakeven point,________.

Contribution margin per unit is a useful tool for calculating contribution margin and operating income.

Winnz sells 8,000 units resulting in $100,000 of sales revenue,$35,000 of variable costs,and $45,000 of fixed costs.To achieve $150,000 in operating income,sales must total ________.

At the breakeven point of 2,000 units,variable costs total $4,000 and fixed costs total $6,000.The 2,001st unit sold will contribute ________ to profits.

How many units would have to be sold to yield a target operating income of $23,000,assuming variable costs are $25 per unit,total fixed costs are $2,000,and the unit selling price is $30?

Breakeven point in units is ________.

The breakeven point revenues is calculated by dividing ________.

Sky High sells helicopters.During the current year,100 helicopters were sold resulting in $820,000 of sales revenue,$250,000 of variable costs,and $342,000 of fixed costs.Breakeven point in units is ________.

If unit outputs exceed the breakeven point ________.

Sky High sells helicopters.During the current year,100 helicopters were sold resulting in $820,000 of sales revenue,$250,000 of variable costs,and $342,000 of fixed costs.The number of helicopters that must be sold to achieve $300,000 of operating income is ________.

The breakeven point decreases if ________.

The difference between total revenues and total variable costs is called contribution margin.

Sales total $400,000 when variable costs total $300,000 and fixed costs total $50,000.The breakeven point in sales dollars is ________.