173

For CVP analysis calculations, which of the following statements is correct? A. In target profit calculations, sales revenue is less than total costs. B. CVP analysis relies on our knowledge of cost function to express relationships among costs, sales volume, and profit. OC. A company's sales mix is ultimately determined by the management of a company. D. The Break-even point is the point at which operating income is greater than $0. O E. If sales volume is expected to be higher than the indifference point, management should choose the cost structure with the higher fixed costs.

APPLY THE CONCEPTS: Target income (sales revenue) Another useful method for figuring out the type of performance your company will need to reach a target income is by using sales revenue. Rather than using the number of units, this method uses total sales revenue. In companies for which the total set of goods produced and sold is more varied, this would be the preferred method, as opposed to a business in which only one product is sold. Assume a company has pricing and cost information as follows: Price and Cost Information Amount Selling Price per Unit $30   Variable Cost per Unit $15   Total Fixed Cost $15,000   For the upcoming period, the company wishes to generate operating income of $40,000. Given the cost and pricing structure for the company’s product, how much sales revenue must it generate to attain its target income? Step 1: Calculate the contribution margin ratio: The contribution margin ratio is the contribution margin in proportion to the selling price on a…

Match each of the following descriptions with the appropriate term.   Clear All Plots only the difference between total sales and total costs Indicates the possible decrease in sales that may occur before operating loss results Graphically shows costs, sales, and operating profit or loss at various levels of units sold The relative distribution of sales among products sold by a company Contribution margin divided by operating income   Profit-volume chart Cost-volume-profit chart Operating leverage Margin of safety Sales mix

Return on investment (ROI) is computed in the following manner: ROI is equal to turnover multiplied by earnings as a percent of sales. Turnover is sales divided by total investment. Total investment is current assets (inventories, accounts receivable, and cash) plus fixed assets. Earnings equal sales minus the cost of sales. The cost of sales consists of variable production costs, selling expenses, freight and delivery, and administrative costs. Complete parts a and b. a. Construct an influence diagram that relates these variables. Choose the correct diagram below. Click here to view influence diagram D. Click here to view influence diagram C. Click here to view influence diagram A. Click here to view influence diagram B. b. Develop a mathematical model using the symbols defined on the left. E: Earnings T: Turnover ROI = T = E = S: Sales TI = C = C: Cost of Sales TI: Total Investment CA: Current Assets FA: Fixed Assets PC: Prod Costs SC: Sales Expense FC: Freight and Delivery AC: Admin…

The systematic examination of the relationships among selling prices, volume of sales and production, costs, and profits is termed a. cost-volume-profit analysis b. contribution margin analysis c. budgetary analysis d. gross profit analysis   In a profit center, the manager has responsibility and authority for making decisions that affect a. assets b. investments c. long-term liabilities d. costs

Which are formulas for ROI? (check all that apply) Sales-Profit Margin Net Operating Income / Average Operating Assets Profit Margin x Inventory Turnover Profit Margin x Asset Turnover Net Operating Income - Average Operating Assets

Understanding the relationships in the expanded contribution margin model may be the singlemost important concept developed in managerial accounting. The model presented here provides a structure for explaining, in a consistent manner, the effect on operating income of changesin selling price, variable expenses, fixed expenses, or the volume of activity. As you study theseexamples, you will notice that four relationships are constantly interacting with one another:1. Revenue −Variable expenses 5 Contribution margin.2. Contribution margin / Revenue 5 Contribution margin ratio.3. Total contribution margin depends on the volume of activity.4. Contribution margin must cover fixed expenses before an operating income is earned.Your goals are to identify these relationships in every cost–volume–profit question and appreciatetheir interaction as a way of thinking that becomes second nature for you. Once you can visualize thisinteraction of these relationships, you are well on your way to…

1. A profit-volume graph differs from a cost-volume-profits graph in that a profit-volume graph displays onlya. costs associated with units produced.b. operating income associated with expected sales.c. revenues and costs associated with sales volume.d. revenues expected at targeted sales levels.e. All of these are correct.   2. Fixed expenses that cannot be directly traced to individual segments are calleda. cost structure.b. direct fixed expenses.c. operating leverage.d. common fixed expenses.e. indifference point.   3. If sales remain the same and the margin of safety increases, which of the following is true?a. The break-even point has decreased.b. The common fixed costs have increased.c. The break-even point has remained constant.d. Variable costs have increased.   4. Match the type of income statement to the costs it includes.a. Variable costing income statementb. Absorption costing income statementc. Both types of income statements 1.    Direct materials for units sold2.…

____              1.Which of the following is a responsibility center that incurs expenses, generates revenues, and is responsible for generating a return on assets? a.              Cost center b.              Revenue center c.              Profit center d.              Investment center   ____              2.Which one of the following is the most useful measure for evaluating a manager's performance in controlling revenues and costs in a profit center? a.              Contribution margin b.              Contribution net income c.              Contribution gross profit d.              Controllable margin   ____              3.Hanover Corporation desires to earn target net income of $42,000. The selling price per unit is $18, unit variable cost is $5.60, and total fixed costs are $123,912. How many units must the company sell to earn its target net income? a.              13,380 b.              9,993 c.              3,387 d.              9,217   ____              4.Remark…

What can the weighted average contribution margin ratio be used for? To solve for a measure, at any level of sales volume, of the sensitivity of operating profit to changes in volume. Breakeven and profit planning for sales volume expressed in dollars (Y) rather than units (Q). To calculate an average per-unit contribution margin based on an assumed sales mix. To figure out the relative proportion in which a company’s products (or services) are sold. To determine the extent of fixed costs in an organization’s cost structure.

Cost-volume-profit (CVP) analysis for revenue planning determines: The desired profit level of a firm. Both revenue maximization and cost minimization. The costs associated with a certain level of revenue. The max amount of revenue a firm can receive. The revenue required to achieve a desired profit level.

Comparison of Performance Using Return on Investment (ROI) Comparative data on three companies in the same service industry are given below: Required: 1. What advantages are there to breaking down the ROI computation into two separate elements, margin and turnover? 2. Fill in the missing information above, and comment on the relative performance of the three companies in as much detail as the data permit. Make

Tom and Jerry are both managers of sales teams at Flint Corp., a furniture company whose most popular item is a tweed couch. Tom and Jerry are very competitive and each attempt to outperform one another every year. Currently, Tom's department has better metrics, which has resulted in larger bonuses for Tom and his team. Flint Corp. evaluates both departments based upon each team's respective return on investment and economic value added. The departments reported the following financial data during the most recent year: Operating Income Sales Average Operating Assets Total Assets Current Liabilities Jerry $125,613 $2,791,400 $953,900 $1,103,880 $208,630 Tom $183,995 $3,679,900 $1,321,120 $1,521,480 $296,860 It should be noted that Flint uses average operating assets as its definition of investment, and it has a minimum required rate of return of 8.72% and a tax rate of 22%. Flint has used a variety of ways to acquire capital and has the current makeup: proportion of equity is 38%, the…

Match each of the following descriptions with the appropriate term. Clear All Plots only the difference between total sales and total costs Indicates the possible decrease in sales that may occur before operating loss results Graphically shows costs, sales, and operating profit or loss at various levels of units sold The relative distribution of sales among products sold by a company Contribution margin divided by operating income Margin of safety Operating leverage Profit-volume chart Sales mix Cost-volume-profit chart mg malt

Describing the balanced scorecard and identifying key performance indicators for each perspective Consider the following key performance indicators, and classify each according to the balanced scorecard perspective it addresses. Choose from a financial perspective, customer perspective, internal business perspective, or learning and growth perspective. Number of employee suggestions implemented Revenue growth Number of on-time deliveries Percentage of salesforce with access to real-time inventory levels Customer satisfaction ratings Number of defects found during the manufacturing Number of warranty claims Return on investment Variable cost per unit Percentage of market share Number of hours of employee training Number of new products developed Yield rate (number of units produced per hour) Average repair time Employee satisfaction Number of repeat customers

Maximizing profits means to ______.a. create a balance between seeking economic profits and seeking accounting profitsb. reinvest accounting profits in an effort to increase production outputs in the long runc. increase the difference between what is given up for inputs and what is received for outputsd. operate in an output range in which the firm experiences constant returns to scale

Cost-volume-profit analysis is used to make many decisions, including product pricing and controlling costs. How does good operating leverage magnify earnings results with modest revenue increase?

How can you show how efficiency ratios can be used to determine the best way to conduct the operations of the company.

I want Correct Answer with explanation of this financial accounting question

Please avoid solutions image based thanku