You are provided with the following data.I Unit sales5 Selling price per unit578Variable expenses per unitFixed expensesTarget Profit910 Required:111213 Contribution margin per unit1415 CM ratio16 Variable expense ratio1718 Compute the break-even.1920Break-even in unit sales$Dagatessss is$80,000 units70 per unit28 per unitCompute the CM ratio and variable expense ratio.$ 2,688,000$ 1,610,000

1. CVP analysis is used to identify the changes in costs and volume that affect a company's…

Answered: Contribution margin per unit CM ratio…

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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A. Mastery Problem: Break-Even Point in Units and the Profit-Volume Graph CVP and the Contribution Margin Income Statement For planning and control purposes, managers have a powerful tool known as cost-volume-profit (CVP) analysis. CVP shows how revenues, expenses, and profits behave as volume changes. In CVP analysis, costs are classified according to behavior: variable or fixed. To arrive at operating income in CVP analysis, costs are classified by behavior on the income statement. This format is known as the contribution margin income statement. Complete the following table to illustrate the format. Select a or b to pick the correct decscription under the sales column Contribution Margin Income Statement Sales $ XXX (a. Less: Variable Cost or b. Less: Fixed costs) (XXX) (a. Contribution margin or b. Gross margin) $ XXX (a. Less: Variable Cost or b. Less: Fixed costs) (XXX) Operating income $ XXX B. CVP and the Break-Even Point Review the following concepts about…
The equation for total costs (Y) is: Y = a+ bX In this equation, “a” represents: Net income Cost of goods sold Total fixed costs The level of activity (e.g., the number of units produced) Total variable costs Variable cost per unit of X Total revenue
Please explain this statement thoroughly. "To estimate what the profit will be at various levels of activity, multiply the number of units to be sold above or below the break-even point by the unit contribution margin."
Change in operating income = change in sales dollars x contribution margin What is the equation for the "change in sales dollars"?
Contribution margin is Oa. profit Ob. the excess of sales over variable costs Oc. Oc. another term for volume in the "cost-volume-profit" analysis Od. the same as sales revenue
The contribution margin equals sales minus all O period O variable O fixed O product expenses.
6. The unit contribution margin is computed by⦁ subtracting the variable cost per unit from the sales price per unit.⦁ dividing the sales revenue by variable cost per unit.⦁ dividing the variable cost per unit by the sales revenue.⦁ subtracting the sales price per unit from the variable cost per unit.
At break even point: a) sales - contribution margin = net income or net loss b) sales - fixed expenses = variable expenses c) sales + variable expenses = contribution margin d) contribution margin + fixed expenses = net income

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Contribution margin per unit CM ratio Variable expense ratio Compute the break-even. Break-even in unit sales