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The sales mix percentages for Novotna’s Boston and Seattle Divisions are 70% and 30%. The contribution margin ratios are: Boston (40%) and Seattle (30%). Fixed costs are $1,110,000. What is Novotna’s break-even point in dollars?
The contribution margin ratio is
sales divided by fixed expenses.
sales divided by variable expenses.
sales divided by contribution margin.
contribution margin divided by sales
Contribution margin is the amount of revenue remaining after deducting
cost of goods sold.
In 2012, Carow sold 3,000 units at $500 each. Variable expenses were $250 per unit, and fixed expenses were $250,000. The same selling price is expected for 2013. Carow is tentatively planning to invest in equipment that would increase fixed costs by 20%, while decreasing variable costs per unit by 20%. What is Carow’s break-even point in units for 2013?
In a CVP income statement, a selling expense is generally
partly a variable cost and partly a fixed cost.
completely a fixed cost.
completely a variable cost.
neither a variable cost nor a fixed cost.
In 2012, Teller Company sold 3,000 units at $400 each. Variable expenses were $280 per unit, and fixed expenses were $180,000. The same selling price, variable expenses, and fixed expenses are expected for 2013. What is Teller’s break-even point in units for 2013?
Roosevelt Corporation has a weighted-average unit contribution margin of $40 for its two products, Standard and Supreme. Expected sales for Roosevelt are 40,000 Standard and 60,000 Supreme. Fixed expenses are $1,800,000. How many Standards would Roosevelt sell at the break-even point?
Ramirez Corporation sells two types of computer chips. The sales mix is 30% (Q-Chip) and 70% (Q-Chip Plus). Q-Chip has variable costs per unit of $60 and a selling price of $100. Q-Chip Plus has variable costs per unit of $70 and a selling price of $130. Ramirez’s fixed costs are $540,000. How many units of Q-Chip would be sold at the break-even point?
A company with a higher contribution margin ratio is
either more or less sensitive to changes in sales revenue, depending on other factors.
less sensitive to changes in sales revenue.
likely to have a lower breakeven point.
more sensitive to changes in sales revenue
Mercantile Corporation has sales of $2,000,000, variable costs of $1,100,000, and fixed costs of $750,000. Mercantile’s margin of safety ratio is
In a sales mix situation, at any level of units sold, net income will be higher if
weighted-average unit contribution margin decreases.
more higher contribution margin units are sold than lower contribution margin units.
more lower contribution margin units are sold than higher contribution margin units.
more fixed expenses are incurred.
Warner Manufacturing reported sales of $2,000,000 last year (100,000 units at $20 each), when the break-even point was 75,000 units. Warner’s margin of safety ratio is
For Pierce Company, sales is $500,000, variable expenses are $330,000, and fixed expenses are $140,000. Pierce’s contribution margin ratio is
For Buffalo Co., at a sales level of 5,000 units, sales is $75,000, variable expenses total $50,000, and fixed expenses are $21,000. What is the contribution margin per unit?
Swanson Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs $4,440,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. The weighted-average contribution margin ratio is