Net income will be: O Greater if more higher-contribution margin units are sold than lower-contribution margin units. O Greater if more lower-contribution margin units are sold than higher-contribution margin units. O Equal as long as total sales remain equal, regardless of which products are sold. O Unaffected by changes in the mix of products sold. None of the above.

Net income will be: O Greater if more higher-contribution margin units are sold than lower-contribution margin units. O Greater if more lower-contribution margin units are sold than higher-contribution margin units. O Equal as long as total sales remain equal, regardless of which products are sold. O Unaffected by changes in the mix of products sold. None of the above.

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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Target profit is added to what other financial statement line item, or element, to determine the numerator in the overall target contribution margin (CM) calculation in break-even analysis? Variable costs Fixed costs Net income after taxes Operating profit
24. Under which method may companies manipulate their income by choosing which units to sell? a) FIFO b) LIFO c) Weighted Average d) Specific Identification
If the percentage change in operating income resulting from a given percentagechange in sales is higher than the percentage change in sales itself, thena. an increase in the selling price would not alter the contribution marginper unit.b. variable costs per unit have increased.c. variable costs have decreased in total.d. the company has operating leverage.e. the company has no fixed costs.
15. If the total contribution margin increases and fixed costs do not change, then net income can be expected to a. decrease by an equal amount. b. increase by an amount equal to the increase in contribution margin times the CM ratio. c. increase by an equal amount. d. none of these.
For each situation, list the assumption, principle, or constraint that has been violated, if any. List only one answer for each situation. a. East Lake Company recognizes revenue at the end of the production cycle but before sale. The price of the product, as well as the amount that can be sold, is not certain. choose one of the assumption, principle or constraint Going concern assumptionPeriodicity assumptionNo violationHistorical cost principleRevenue recognition principleEconomic entity assumption b. Hilo Company is in its fifth year of operation and has yet to issue financial statements. (Do not use the full disclosure principle.) choose one of the assumption, principle or constraint Historical cost principleGoing concern assumptionRevenue recognition principleNo violationPeriodicity assumptionEconomic entity assumption c. Gomez, Inc. is…
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Sales Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Net income (loss) Continue LA $ Eliminate LA Net Income Increase (Decrease)
:Holding other factors constant, a company's contribution margin per unit will increase with All answers given are NOT correct .a O any increase in variable cost per unit .b O .any increase in quantity sold .c O any increase in the selling price per unit .d O increase in its total fixed costs .e O
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Which of the following items will not cause the company's ROA to increase? Multiple Choice O O Reducing costs. Reducing company assets without impacting sales. Increasing company assets. Increasing the selling price per unit. $
Which of the following statements correctly complete the sentence:"Gross Margin equals":I. sales revenue less (minus) cost of goods sold.II. contribution margin less (minus) fixed costs.III. operating income plus all period costs.IV. sales revenue less (minus) cost of goods manufactured.