Sarah Allen owns and operates Blossom, a bakery that creates personalized birthday cakes for a child's first birthday. The cakes, which sell for $56 and feature an edible picture of the child, are shipped throughout the country. A typical month's results are as follows: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income $944,720 708,540 236,180 123,620 $112,560

Sarah Allen owns and operates Blossom, a bakery that creates personalized birthday cakes for a child's first birthday. The cakes, which sell for $56 and feature an edible picture of the child, are shipped throughout the country. A typical month's results are as follows: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income $944,720 708,540 236,180 123,620 $112,560

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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Which of the following is not another way of describing the marginal propensity to consume? a. autonomous consumption spending b. the slope of the consumption function c. the amount by which real consumption spending rises when real disposable income increases by one dollar d. MPC e. the change in real consumption spending divided by the change in real disposable income
In cost-volume-profit analysis, what is the estimated profit at the break-even point?
The break-even point can be calculated with the following formula: Total fixed expenses / (Variable cost per unit Selling price per unit)TRUEFALSE
The contribution margin equals sales minus all O period O variable O fixed O product expenses.
In the fixed cost per unit does the it increase as activity decreases and will decrease as activity increases?
What are the answers for the following? Construct a cost-volume-profit chart on your own paper. What is the break-even sales? What is the expected margin of safety in dollars and as a percentage of sales? Determine the operating leverage. Round to one decimal place.
What effect does an increase in sales price have on contribution margin? An increase in fixed costs? An increase in variable costs?
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
Which of the below statements refers to the concept of deferred payment? a. It is the original selling price of a product. b. It is the sum of down payment and all the monthly payments. c. It is the net price paid after discount. d. It is the totality of all monthly payments and the amount financed.
What's the expected profit at break-even in a cost-volume-profit analysis?
When the sales price per unit decreases, the contribution margin per unit A. decreases B. increases OC. increases proportionately OD. remains the same 13