In determining the number of Break Even (B-E) units to sell in order to obtain the amount of Breakeven dollars, the equation would show Fixed Costs per unit divided by Contribution Margin (CM) per unit. TRUE FALSE

In determining the number of Break Even (B-E) units to sell in order to obtain the amount of Breakeven dollars, the equation would show Fixed Costs per unit divided by Contribution Margin (CM) per unit. TRUE FALSE

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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In determining the number of Break Even (B-E) units to sell in order to obtain the amount of Breakeven
dollars, the equation would show Fixed Costs per unit divided by Contribution Margin (CM) per unit.
TRUE
FALSE

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Which of the following statements is true? I. Incremental analysis is an analytical approach that focuses only on those revenues and costs that will not change as a result of a decision. II. When expressed on a per unit basis, fixed costs can mislead decision makers into thinking of them as variable costs. II. To estimate what the profit will be at various levels of sales volume, multiply the number of units to be sold above or below the break-even point by the unit contribution margin. Statements I and III are true. Statements II and III are true. All of the statements are true. None of the statements are true.
Sometimes management prefers that the break-even point be expressed in sales dollars rather than units. This can be accomplished by using the contribution margin per unit Select one: O True O False
On the CVP graph, the next unit sold will increase sales by an amount equal to the Select one: O a. Contribution margin ratio O b Selling price per unit minus the variable.costs per unit Oc Variable costs per unit Od. Difference between contribution margin and fixed costs O e. Selling price per unit
1. Fill in the missing numbers in the table. Use the following questions to help fill in the missing numbers in the table: a. What is the total contribution margin? b. What is the total variable expense? c. How many units were sold? d. What is the per-unit variable expense? e. What is the per-unit contribution margin? 2. Answer the following questions about breakeven analysis: a. What is the breakeven point in units? b. What is the breakeven point in sales dollars? 3. Answer the following questions about target profit analysis and safety margin: a. How many units must the company sell in order to earn a profit of $48,000? b. What is the current margin of safety in units? c. What is the margin of safety in sales dollars? d. What is the margin of safety in percentage?
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."
The break-even point can be calculated with the following formula: Total fixed expenses / (Variable cost per unit Selling price per unit)TRUEFALSE
Before a company reaches the breakeven point Select one: O-a. The fixed cost 1s egual to zero O b. Total fixed costs are increasing Oc The total contribution margin is lower than totalfixed costs O d. The total contribution margin is negative Oe The contribution margin per unit is higher than the fixed costs per unit
The contribution margin equals sales minus all O period O variable O fixed O product expenses.
10 Ritchie Manufacturing Company makes a product that it sells for $160 per unit. The company incurs variable manufacturing costs of $84 per unit. Variable selling expenses are $12 per unit, annual fixed manufacturing costs are $470,000, and fixed selling and administrative costs are $208,400 per year. Required Determine the break-even point in units and dollars using each of the following approaches: Skipped a. Use the equation method. b. Use the contribution margin per unit approach. c. Use the contribution margin ratio approach. d. Prepare a contribution margin income statement for the break-even sales volume.
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.
If an organization wants to make a profit, it must generate more sales revenue than the total costs it incurs. This relation can be expressed using which of the following profit equations? O a. Operating income = [(Sales price per unit - Variable cost per unit) x #units sold] - Fixed cost O b. Operating income = [Sales price per unit - Fixed cost per unit) x # units produced] -Variable cost Oc Operating income Sales revenue - Total variable costs - Discretionary costs O d. Operating income - Sales revenue - Committed costs - Fixed costs
Holding other factors constant, a company's contribution margin per unit will increase with: a. All answers given are NOT correct. O b. any increase in quantity sold. С. any increase in variable cost per unit O d. any decrease in the selling price per unit e. increase in its total fixed costs