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Exam 6: Cost-Volume-Profit Analysis

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Question 51

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If sales revenue stays the same but the contribution margin ratio decreases, then:

A) net operating income will increase.
B) fixed costs will decrease.
C) net operating income will decrease.
D) fixed costs will increase.

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Question 52

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Amanda's Silver Company produces a unique item with the following information: Required: Calculate the following based on the above information:

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Question 53

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All else being equal, which of the following changes would increase a company's net operating income?

Charlie's Hotdog Stand Charlie's Hotdog Stand sells hotdogs for $2.50 each. The variable costs per hotdog are $.50. Charlie's fixed costs are currently $800 per month. Charlie is considering expanding his business to three hotdog stands which will increase fixed costs per month by $1,200. Refer to the Charlie's Hotdog Stand information above. If Charlie does expand his business to three stands, how many additional hotdogs will need to be sold per month in order to break even?

The contribution margin income statement is structured in such a way as to emphasize:

Which of the following statements is correct as it relates to a company that sells multiple products?

Carolina Products has the following product information: Required: Calculate the following based on the above information:

All else being equal, which of the following would cause net operating income to increase?

Which of the following accounting system outputs is not needed for cost-volume-profit analysis?

Carson Products has the following product information available: Required: If Carson is in the 40% tax bracket, how many units need to be sold in order to earn an after-tax target profit of $300,000?

Which of the following would you not find on a traditional income statement?

Jazz Products has the following information available for the month of March: The company's manager is considering several options to increase net operating income. By what amount do sales dollars need to increase in order for net operating income to increase to $62,000?

Harrison Manufacturing Harrison Manufacturing has the following product information available: Refer to the Harrison Manufacturing information above. What is the break-even point in sales dollars?

A company's manager estimates that in the upcoming year, total variable costs will increase by $20,000 and total fixed costs will decrease by $14,000. Assume that the unit sales price did not change. What will be the anticipated effect on net operating income?

Vincent Products manufactures a particular item with the following information: Required: Calculate the following based on the above information:

Joe's Coffee House Joe's Coffee House has the following information available for the month of July: Refer to the Joe's Coffee House information above. Each additional cup of coffee sold will increase net operating income by:

A company's manager estimates that in the upcoming year, decreasing advertising costs by $50,000 will cause sales revenue to decrease by $120,000. If the company's contribution margin ratio is 35%, what will be overall effect on net operating income?

Hunter Inc. Hunter Inc. sells a unique product with the following information available: Refer to Hunter Inc. information above. If one more unit is sold, net operating income will:

Which of the following statements is true when making decisions using cost-volume-profit (CVP) analysis?

While preparing a traditional income statement, the costs are shown into which of the two categories?