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ACCT 200
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EXAM 2 review- work out problems
Terms in this set (11)
A CVP graph does not include-
Variable cost per unit line
Fixed costs are $800,000 and the variable costs are 80% of the unit selling price. What is the break-even point in dollars?
$4,000,000.
800000/.20 cm ratio
Fixed costs are $1,500,000 and the contribution margin per unit is $150. The selling price of each unit is $300. What is the break-even point?
10,000 units
1,500,000/150
If the unit sales price is $20, unit variable costs is $14, and the total fixed costs are $240,000. How many units must be sold to earn net income of $180,000?
70,000 units
240000+180000/6
The margin of safety ratio is
62.5%
105000/168000
The following monthly data area available for mason inc. Which produces only one product. Selling price per unit, $42; Unit variable expense $14, total fixed expenses $42,000. Actual sales for the month of June 4000 units. How much is the margin of safety for the company?
105000
$42000/28cm=1500*42
Quaker Corporation sells its product for $40. The variable costs are $18 per unit. Fixed costs are $19,250. The company is considering the purchase of an automated machine that will result in a $2 reduction in unit variable costs and an increase of $4,750 in fixed costs. Which of the following is true about the break-even point in units?
It will increase 125 units. (24000 / 24 = 1000 it was 19250 / 22 =875)
What is total contribution margin if sales volume increases by 30%?
117000
(390000-27300) with a contribution margin of 30% and increasing by 30% to 390000, 390000 x .30 CM ratio =$117,000 contribution margin
The net operating income would decrease by
3,800
(2000 units x 1 less CM = - 2000 + 50 units x 4 CM = +200 - 2000 increase in fixed expenses) CM was $5 a unit, now goes to $4 a unit when variable costs increase $1 a unit Or do with Sales 41,000 - VC 32,800 = CM 8200 -FC increased to 8000 leaves only 200 NI
the degree of operating leverage is
1.714 (CM 180,000 / net operating income 105,000)
or sales 300,000 - .40 VC 120,000 = CM 180,000 - FC 75,000 = NI 105,000
its net operating income should increase by
. 38% (4% x 9.5)
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