Cost-Volume-Profit Analysis Self-Test Questions 1. The difference between the sales price and the total variable costs is the contribution margin. (D) 2. The breakeven volume in units (perfume sticks) for 2005 is TR-VC-FC=PBT MR=900000/1800 = 500 TR-VC-FC=0 VC/Q = 495000/1800 = 275 Q*MR - Q(VC/Q) = FC Q = _____FC_____ MR-VC/Q Q = 247500/(500 275) Q=1100 Therefore (B) 3. If sales volume is expected to be 2100 units with prices/costs same‚ after-tax net income is expected
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Table of Contents I. INTRODUCTION 2 II. STATEMENT OF PROBLEM 2 III. OBJECTIVES 3 IV. SCENARIOS 3 Question 1 5 Question 2 7 Question 3 10 Question 4 12 Question 5 13 Question 6 14 Question 7 16 V. CONCLUSION 18 Bibliography 19 INTRODUCTION The case is about manufacturing company‚ Hospital Supply‚ Inc.‚ that produced hydraulic hoists for the local market. The hydraulic hoist is useful to the hospital for moving bedridden patients
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Wood Crafts‚ Inc. is a manufacturer of furniture for specialty shops throughout the Northeast and has an annual sales volume of $12 million. The company has four major product lines: bookcases‚ magazine racks‚ end tables‚ and bar stools. Each line is managed by a production manager. Since production is spread fairly evenly over the 12 months of operation‚ Sara McKinley‚ Wood Crafts’ controller‚ has prepared an annual budget divided into 12 periods for monthly reporting purposes. Wood Crafts uses
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A1. Budget planning is in essence the process of forecasting and determining a company’s financial goals for both the long term and short term. Competition Bike‚ Inc. has come up with a budget schedule for year 9 operations. Based on its previous years and past financial numbers there are several areas of concern. First research and development is a concern because in the years that they invested more money in research and development it seemed sales where at its highest. Research and development
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and pricing the products affordably‚ we can gain customers’ loyalty and awareness. Since our company’s main focus is premium products we will aim for high contribution margins‚ around 50%‚ on average‚ over all five products. After establishing our company brand and products within the market we will look to increase contribution margin to be between 55%-60% over all five products. Our company’s optimal balance is to have variable costs outweigh fixed costs unless our company gains rapid
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This set of 28 questions‚ taken from prior examinations‚ covers topics in Chapters 6‚ 7‚ and 9. The purpose of sample multiple choice questions is to acquaint you with the style and substance of typical exam questions on this material. Please be aware that: 1. multiple choice format questions are only one of many resources available to prepare for testing events – reading textbook chapters and working through chapter examples‚ studying the end-of-chapter review problem and accompanying
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4) fixed costs per unit stay the same. Question 17 0 / 1 point A firm has revenues of $120‚000‚ a contribution margin ratio of 30%‚ and fixed expenses that total $56‚000. If revenues increase by $20‚000‚ then: 1) operating income will increase by $6‚000. 2) operating income will be 0. 3) fixed expenses will increase $8‚000. 4) the contribution margin ratio will increase by 1/8. Question 18 0 / 1 point Direct costs pertain to costs that: 1) are traceable
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Chapter 14 Working Capital and Current Assets Management Solutions to Problems P14-1. LG 2: Cash Conversion Cycle Basic = Average age of inventories + Average collection period = 90 days + 60 days = 150 days (a) Operating cycle (OC) (b) Cash Conversion Cycle (CCC) = Operating cycle − Average payment period = 150 days − 30 days = 120 days = (total annual outlays ÷ 365 days) × CCC = [$30‚000‚000 ÷ 365] × 120 = $9‚863‚013.70 (d) Shortening either the average age of inventory or the average collection
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Case Study Report- Ford Motor Introduction Ford Motor Company (Ford) is an American multinational corporation which produces cars and trucks. The automaker was founded by Henry Ford and incorporated on June 16‚ 1903. Ford is the second largest automaker in the U.S. and the fifth-largest in the world based on annual vehicle sales in 2010. Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce‚ using elaborately engineered manufacturing
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respect to revenue hours‚ power and operations hourly personnel are the two variable costs. The cost per revenue hour for power is $4.70‚ and the cost per revenue hour for operations hourly personnel is $24.00. Continuing with the analysis a contribution margin income statement has been created to determine the potential profits Salem Data Services could earn assuming the intracompany usage was 205 hours. Examining this income statement‚ operating income is a net loss of $30‚014 (see Exhibit 1). This
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