Financial & Managerial Accounting
14th Edition
ISBN: 9781337119207
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
thumb_up100%
Chapter 19, Problem 6DQ
To determine
Contribution Margin ratio: It is a ratio that measures the contribution margin generated by the company from the sales to make it avialable for paying the fixed cost and generate a profit. It is expressed as percentage of margin available from each dollar sales to pay fixed expenses and to provide profit. It is also called as profit-volume ratio. The formula to calculate the contribution margin ratio is as follows:
To explain: the likely means of improving the income from operations
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
PLEASE ANSWER ALL
Write “True” if the statement is true and write “False” if the statement is false.
The relevant range of activity is the activity level at which the company makes the highestamount profits.
Fixed costs per unit decline as the activity level increase within the relevant range of activity.
A period cost is defined as the cost incurred when asset is used up or sold for the purpose ofgenerating revenue.
Opportunity costs could be defined as the revenue lost when one alternative is not taken infavor of another alternative.
The value chain is the sequence of business functions in which
A. usefulness is added to the products or services of an organization
B. producing and delivering the product or service is of prime importance
C. value is deducted from the products or services of an organization
D. products and services are evaluated with respect to their value to the supply
chain
A contribution margin income statement is an income statement that groups costs into
their variable and fixed components.
True
False
Which of the following underlying assumptions form(s) the basis for cost-volume-profit analysis?
All of the choices are assumptions that underlie cost-volume-profit analysis.
In multiproduct organizations, the sales mix remains constant.
Worker efficiency and productivity remain constant.
Revenues and costs behave in a linear manner.
Chapter 19 Solutions
Financial & Managerial Accounting
Ch. 19 - Describe how total variable costs and unit...Ch. 19 - Which of the following costs would be classified...Ch. 19 - Describe how total fixed costs and unit fixed...Ch. 19 - In applying the high-low method of cost estimation...Ch. 19 - If fixed costs increase, what would be the impact...Ch. 19 - Prob. 6DQCh. 19 - If the unit cost of direct materials is decreased,...Ch. 19 - Both Austin Company and Hill Company had the same...Ch. 19 - Prob. 9DQCh. 19 - Prob. 10DQ
Ch. 19 - High-low method The manufacturing costs of...Ch. 19 - Contribution margin Lanning Company sells 160,000...Ch. 19 - Prob. 19.3BECh. 19 - Prob. 19.4BECh. 19 - Prob. 19.5BECh. 19 - Prob. 19.6BECh. 19 - Margin of safety Liu Company has sales of...Ch. 19 - Classify costs Following is a list of various...Ch. 19 - Identify cost graphs The following cost graphs...Ch. 19 - Prob. 19.3EXCh. 19 - Identify activity bases From the following list of...Ch. 19 - Identify fixed and variable costs Intuit Inc....Ch. 19 - Prob. 19.6EXCh. 19 - High-low method Ziegler Inc. has decided to use...Ch. 19 - High-low method for a service company Boston...Ch. 19 - Contribution margin ratio A. Young Company budgets...Ch. 19 - Contribution margin and contribution margin ratio...Ch. 19 - Prob. 19.11EXCh. 19 - Prob. 19.12EXCh. 19 - Break-even sales Currently, the unit selling price...Ch. 19 - Prob. 19.14EXCh. 19 - Prob. 19.15EXCh. 19 - Break even analysis for a service company Sprint...Ch. 19 - Prob. 19.17EXCh. 19 - Prob. 19.18EXCh. 19 - Prob. 19.19EXCh. 19 - Prob. 19.20EXCh. 19 - Prob. 19.21EXCh. 19 - Break-even sales and sales mix for a service...Ch. 19 - Margin of safety A. If Canace Company, with a...Ch. 19 - Prob. 19.24EXCh. 19 - Operating leverage Beck Inc. and Bryant Inc. have...Ch. 19 - Classify costs Seymour Clothing Co. manufactures a...Ch. 19 - Break-even sales under present and proposed...Ch. 19 - Prob. 19.3APRCh. 19 - Prob. 19.4APRCh. 19 - Prob. 19.5APRCh. 19 - Contribution margin, break even sales,...Ch. 19 - Classify costs Cromwell Furniture Company...Ch. 19 - Prob. 19.2BPRCh. 19 - Break even sales and cost-volume-profit chart For...Ch. 19 - Prob. 19.4BPRCh. 19 - Sales mix and break even sales Data related to the...Ch. 19 - Prob. 19.6BPRCh. 19 - Prob. 1ADMCh. 19 - Break-even subscribers for a video service Star...Ch. 19 - Prob. 3ADMCh. 19 - Prob. 19.1TIFCh. 19 - Prob. 19.3TIF
Knowledge Booster
Similar questions
- The measure that reflects an organization's variable and fixed cost relationship and indicates how a percentage change in sale from the current level will impact from the current level will impact profits is called the a. break-even point. b. contribution margin. ç. degree of operating leverage. d gross margin. e. margin of safety.arrow_forwardPlease help with the attached questionarrow_forwardIn evaluating the profit center manager, the operating income should be compared a.across profit centers b.to the competitor's net income c.to the total company earnings per share d.to a budgetarrow_forward
- The following statements are true regarding the financial perspective EXCEPT:a. Financial performance can be improved through two basic approaches – revenuegrowth and productivity.b. Financial objectives typically relate to productivity.c. A financial measure might be net income.d. A financial objective might be to offer low process to satisfy and retain price-sensitivecustomers.arrow_forwardWhich of the following relate(s) to gross profit margin? O a. the profit margin after subtracting variable manufacturing costs O b, a term often used in manufacturing businesses Oc a through c O d. the profit margin after subtracting direct costs. from wholesale revenue O e. a and barrow_forwardhelp plearrow_forward
- “The traditional income statement format arranges the data in a way that allows management to more easily analyze how changes in production and sales will influence operating profit’’ Discuss the accuracy of this statement.arrow_forwardCost-volume-profit (CVP) analysis for revenue planning determines: The desired profit level of a firm. Both revenue maximization and cost minimization. The costs associated with a certain level of revenue. The max amount of revenue a firm can receive. The revenue required to achieve a desired profit level.arrow_forwardMatch each of the following descriptions with the appropriate term. Clear All Plots only the difference between total sales and total costs Indicates the possible decrease in sales that may occur before operating loss results Graphically shows costs, sales, and operating profit or loss at various levels of units sold The relative distribution of sales among products sold by a company Contribution margin divided by operating income Profit-volume chart Cost-volume-profit chart Operating leverage Margin of safety Sales mixarrow_forward
- 1. A profit-volume graph differs from a cost-volume-profits graph in that a profit-volume graph displays onlya. costs associated with units produced.b. operating income associated with expected sales.c. revenues and costs associated with sales volume.d. revenues expected at targeted sales levels.e. All of these are correct. 2. Fixed expenses that cannot be directly traced to individual segments are calleda. cost structure.b. direct fixed expenses.c. operating leverage.d. common fixed expenses.e. indifference point. 3. If sales remain the same and the margin of safety increases, which of the following is true?a. The break-even point has decreased.b. The common fixed costs have increased.c. The break-even point has remained constant.d. Variable costs have increased. 4. Match the type of income statement to the costs it includes.a. Variable costing income statementb. Absorption costing income statementc. Both types of income statements 1. Direct materials for units sold2.…arrow_forwardWhich of the following is NOT an example of a metric that companies are likely to use to measure some aspect of performance? a. Operating income b. CEO salary c. Cash flows d. Average employee tenurearrow_forwardWhich of the following statements about CVP analysis is false ? a. Total revenues and total costs are linear in relation to output units . b. Managers use (CVP ) analysis to study the behavior of and relationship among the elements such as total revenues , total costs , and income c. All of the given answers are true . d. Unit selling price , unit variable costs , and total fixed costs are known and remain constant . e. Operating income calculations in CVP analysis are based on contribution margin not gross margin .arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning