An analyst is constructing a simple model to determine the gross and net profit of a product, given its profit per unit, quantity sold, andthe total costs assigned to the product. The calculation for gross profit is Profit per Unit times Quantity. The calculation for Net Profit isGross Profit minus Total Costs.AB1.2 Profit per Unit83 Quantity|10,1004Gross Profit56 Total Costs6,10078Net ProfitWith the values for Profit per Unit, Quantity, and Total Costs shown above, what should the model return for the following calculatedcells?CellValueGross ProfitNet Profit

Gross profit means the difference between the sale revenue and cost of goods sold where as net…

Answered: An analyst is constructing a simple…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

The ratio of contribution margin in dollars to the selling price is the: Select one: O profit margin. O break-even point in unit sales. O contribution margin ratio. O net income
“Cost-volume-profit (CVP) analysis is based entirely on unit costs.” Do you agree? Explain.
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…
The equation for Gross Profit is "Gross Profit = Revenues - Cost of Goods." Which of the following would increase the Gross Profit?
Which of the following methods is used to determine the sales volume necessary to achieve a target profit? None of the above Contribution margin ratio method Unit sales method Absorption costing method
Cost-volume-profit analysis is used to make many decisions, including product pricing and controlling costs. Are these assumptions always valid?
1. Cost-volume-profit analysis is used for ________. analyzing the effects of changes in costs on profits analyzing the effects of changes in volume on profits determining selling price All of these choices are correct. 2. Contribution margin is the ________. difference between sales and fixed costs difference between sales and total costs difference between sales and variable costs None of these choices are correct.
Concept introduction Gross profit ratio: Gross profit ratio calculated by dividng the gross profit by sales.The formula to calculate the gross profit ratio is as follows: Gross profit = Gross profit/sales Gross profit is calculated using the following formula: Gross profit= Sales-Cost of Goods Sold To choose: The correct term for excess of sales over the cost of goods sold.
First step - you need to understand each individual components of the income statement (also called a Profit & Loss Statement or P&L Statement): Sales (Revenue) The sales figure represents the amount of revenue generated by the business. It is calculated as the total of the number of units sold multiplied by the selling price per unit. The amount recorded here is the total sales, minus any product returns or sales discounts. Cost of Goods Sold This number represents the costs directly associated with making or acquiring your products. Costs include materials purchased from outside suppliers used in the manufacture of your product, as well as any internal expenses directly expended in the manufacturing process. In a service business where you, as the owner, are the only expense in supplying the service, and you do not pay yourself a salary beyond the company profits, your service expense may be zero. However, in a service business where you pay yourself a salary or have…
Cost-volume-profit-analysis can be used to determine expected income from predicted sales and cost levels True False
Which tool can be used to easily calculate the change in profit resulting from a change in sales price, sales volume, variable costs, or fixed costs?
The “plus” in cost-plus pricing is often referred to as Markup. Extra profit. Gross profit. Margin of Safety.

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