Question

**Chapter 5 Cost-Volume-Profit Relationships**

**The dashed lines indicate a "Fill in the blank"
area**

1) What is the Contribution income statement?

__________________________

__________________________

__________________________

__________________________

__________________________

2) What is the gross profit ratio?_____________________________________________

3) What is the contribution margin ratio?______________________________________

4) What is the break-even point?_____________________________________________

5) Give 3 ways of stating breakeven: (relating items from the contribution income statement)

_____________________________

_____________________________

_____________________________

6) What is the formula to find the breakeven number of units?____________________________

7) How can you determine the number of units necessary to attain a certain level of profit?

_____________________________________________________________________________

8) How can you determine total sales at the breakeven point?_____________________________

9) What is a fixed cost?_____________________________________________________________

10) How does a fixed cost behave in total?______________________________________________

11) How does a fixed cost behave per unit?______________________________________________

12) What is a variable cost?___________________________________________________________

13) How do variable costs behave in total?_______________________________________________

17) How do variable costs behave per unit?_______________________________________________

18) What is margin of safety?__________________________________________________________

Answer #1

As per answering guidelines I am answering first four parts , for rest of the answers submit question separately.

Good luck.

Chapter 5 Cost-Volume-Profit Relationships
What is the Contribution income statement?
__________________________
__________________________
__________________________
__________________________
__________________________
What is the gross profit
ratio?_____________________________________________
What is the contribution margin
ratio?______________________________________
What is the break-even
point?_____________________________________________
Give 3 ways of stating breakeven: (relating items from the
contribution income statement)
_____________________________
_____________________________
_____________________________
What is the formula to find the breakeven number of
units?____________________________
How can you determine the number of units necessary to attain a
certain level of profit?
_____________________________________________________________________________
How can you determine...

Basic Cost-Volume-Profit Concepts
Klamath Company produces a single product. The projected income
statement for the coming year is as follows:
Sales (47,900 units @ $26.00)
$1,245,400
Total variable cost
398,528
Contribution margin
$ 846,872
Total fixed cost
914,056
Operating income
$ (67,184)
Required:
1. Compute the unit contribution margin and the
units that must be sold to break even.
Unit contribution margin
$
Break-even units
units
2. Suppose 10,000 units are sold above
breakeven. What is the operating income?
$...

Mastery Problem: CVP Analysis - Constructing a
Cost-Volume-Profit Chart
CVP Analysis and the Contribution Margin Income
Statement
For planning and control purposes, managers have a powerful tool
known as cost-volume-profit (CVP) analysis. CVP analysis shows how
revenues, expenses, and profits behave as volume changes, which
helps identify problems and create solutions. In CVP analysis,
costs are classified according to behavior: variable or fixed,
rather than by category: product (which includes both variable and
fixed) or period (which includes both variable...

Mastery
Problem: CVP Analysis - Constructing a Cost-Volume-Profit
Chart
CVP Analysis
and the Contribution Margin Income Statement
For planning and
control purposes, managers have a powerful tool known as
cost-volume-profit (CVP) analysis. CVP analysis shows how revenues,
expenses, and profits behave as volume changes, which helps
identify problems and create solutions. In CVP analysis, costs are
classified according to behavior: variable or fixed, rather than by
category: product (which includes both variable and fixed) or
period (which includes both variable...

I am having trouble with a Cybertext problem in the Cost Volume
Relationships - Profit Planning section.
It reads: For 20x2 the selling price per lamp will be $45. The
company would like to have a operating income equal to 31% of
sales. If that is to be achieved, what would be the sales in units
in 20x2?
There's no other data given. From previous problems:
Fixed Costs: $380,000,
Contribution Margin per Unit is 21.7018250
Variable Cost per Unit: $23.2981750

How is profit indicated on a cost-volume-profit
graph?
Wuntch Products sold 100,000 units last year for $2.00 each.
Variable costs per unit were $0.30 for direct materials, $0.50 for
direct labor, and $0.30 for variable overhead. Fixed costs were
$60,000 in manufacturing overhead and $40,000 in nonmanufacturing
costs.
a. What is the total contribution
margin?
b. What is the unit contribution
margin?
c. What is the contribution margin
ratio?
d. If sales increase by 20,000 units,
by how much will...

ABC company sold 4,000 units, had fixed cost of $500,000 and an
operating income of $80,000. Determine (1) Breakeven point in sales
dollars (2) Contribution margin and contribution margin ratio is
60% (3) Selling price per unit and variable cost per unit. (4) What
is the margin of safety. If the fixed cost was $300,000, what would
have been the contribution margin at breakeven point.

CHAPTER 6 HOMEWORK
Exercise 6-18 Break-Even and Target Profit Analysis; Margin of
Safety; CM Ratio [LO6-1, LO6-3, LO6-5, LO6-6, LO6-7]
Menlo Company distributes a single product. The company’s sales
and expenses for last month follow:
Total
Per Unit
Sales
$
318,000
$
20
Variable expenses
222,600
14
Contribution margin
95,400
$
6
Fixed expenses
72,600
Net operating income
$
22,800
Required:
1. What is the monthly break-even point in unit sales and in
dollar sales?
2. Without resorting to computations,...

Cost-Volume-Profit, Margin of Safety
Victoria Company produces a single product. Last year’s income
statement is as follows:
Victoria Company
Contribution Margin Income Statement
For the Last Year
1
Sales (29,000 units)
$1,218,000.00
2
Variable cost
812,000.00
3
Total contribution margin
$406,000.00
4
Fixed cost
300,000.00
5
Operating income
$106,000.00
Required:
1.
Compute the break-even point in units and sales dollars
calculated using the break-even units.
2.
What was the margin of safety for Victoria last year in sales
dollars?
3....

Exercise 5-18 Break-Even and Target Profit Analysis; Margin of
Safety; CM Ratio [LO5-1, LO5-3, LO5-5, LO5-6, LO5-7]
Menlo Company distributes a single product. The company’s sales
and expenses for last month follow:
Total
Per Unit
Sales
$
312,000
$
20
Variable expenses
218,400
14
Contribution margin
93,600
$
6
Fixed expenses
73,200
Net operating income
$
20,400
Required:
1. What is the monthly break-even point in unit sales and in
dollar sales?
2. Without resorting to computations, what is the...

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