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A company's product sells for $X per unit, has variable costs of $Y per unit, and total fixed costs of $Z. Which formula correctly calculates the break-even point in units?
A company's product sells for $X per unit, has variable costs of $Y per unit, and total fixed costs of $Z. Which formula correctly calculates the break-even point in units?
- Z * (X – Y)
- (X - Y) / Z
- Z / (X – Y) (correct)
- X / Y
Which of the following statements best describes the contribution margin?
Which of the following statements best describes the contribution margin?
- Selling price per unit minus variable cost per unit (correct)
- Fixed cost per unit minus selling price per unit
- Selling price per unit minus fixed cost per unit
- Total income minus total fixed costs
A business aims for a target profit of $25,000. The selling price per unit is $50, variable cost per unit is $30, and fixed costs are $10,000. How many units must the business sell to achieve the target profit?
A business aims for a target profit of $25,000. The selling price per unit is $50, variable cost per unit is $30, and fixed costs are $10,000. How many units must the business sell to achieve the target profit?
- 3,500 units
- 500 units
- 1,750 units (correct)
- 750 units
The portion of a unit's sales price that contributes towards covering fixed expenses is known as its ________.
The portion of a unit's sales price that contributes towards covering fixed expenses is known as its ________.
A company sells its product for $150 and has a contribution margin ratio of 60%. Determine the company's variable cost ratio.
A company sells its product for $150 and has a contribution margin ratio of 60%. Determine the company's variable cost ratio.
A company's contribution margin per unit is $25. If the company's activity level increases from 200 units to 350 units, by how much will the total contribution margin increase?
A company's contribution margin per unit is $25. If the company's activity level increases from 200 units to 350 units, by how much will the total contribution margin increase?
A company has fixed costs of $6,000 per month. Their product sells for $200 and has a contribution margin ratio of 30%. How many units must they sell to break even?
A company has fixed costs of $6,000 per month. Their product sells for $200 and has a contribution margin ratio of 30%. How many units must they sell to break even?
Company A wants to earn $5,000 profit in January. Their fixed costs are $10,000, and their product has a per-unit contribution margin of $250. How many units must they sell to reach their target income?
Company A wants to earn $5,000 profit in January. Their fixed costs are $10,000, and their product has a per-unit contribution margin of $250. How many units must they sell to reach their target income?
A company's break-even point is 500 units. Actual sales are 700 units. If the fixed costs are $10,000 and the selling price per unit is $50, what is the margin of safety in dollars?
A company's break-even point is 500 units. Actual sales are 700 units. If the fixed costs are $10,000 and the selling price per unit is $50, what is the margin of safety in dollars?
Given the information from the previous question (break-even point of 500 units, actual sales of 700 units), calculate the company’s margin of safety (MOS) in percentage.
Given the information from the previous question (break-even point of 500 units, actual sales of 700 units), calculate the company’s margin of safety (MOS) in percentage.
Blink Industries is considering investing an additional $25,000 in advertising, which they believe will increase sales volume by 10,000 units. Current sales are 6,500 units for $747,500, variable costs are $448,500, fixed costs are $19,500, and net operating income is $279,500. What is the new net operating income for Blink Industries if the additional advertising investment is made and sales increase as expected? Assume the variable cost per unit remains constant.
Blink Industries is considering investing an additional $25,000 in advertising, which they believe will increase sales volume by 10,000 units. Current sales are 6,500 units for $747,500, variable costs are $448,500, fixed costs are $19,500, and net operating income is $279,500. What is the new net operating income for Blink Industries if the additional advertising investment is made and sales increase as expected? Assume the variable cost per unit remains constant.
B Company has fixed costs of $20,000 and a contribution margin ratio of 40%. If current sales are $75,000, what is the margin of safety in dollars?
B Company has fixed costs of $20,000 and a contribution margin ratio of 40%. If current sales are $75,000, what is the margin of safety in dollars?
Which formula correctly calculates the degree of operating leverage?
Which formula correctly calculates the degree of operating leverage?
Z Company is considering purchasing new equipment that would increase fixed costs from $96,000 to $196,000 and decrease variable costs from $14 per unit to $8 per unit. The selling price is $20 per unit. At what production level would the company's profit remain unchanged if it implements the change?
Z Company is considering purchasing new equipment that would increase fixed costs from $96,000 to $196,000 and decrease variable costs from $14 per unit to $8 per unit. The selling price is $20 per unit. At what production level would the company's profit remain unchanged if it implements the change?
A company sold 200,000 units with total sales of $2,000,000. Direct labor was $120,000 and direct material was $480,000. Fixed costs were $800,000. What is the company’s contribution margin per unit?
A company sold 200,000 units with total sales of $2,000,000. Direct labor was $120,000 and direct material was $480,000. Fixed costs were $800,000. What is the company’s contribution margin per unit?
W Company sells a single product for $200 per unit with a variable cost of $80 per unit. The company’s monthly fixed expenses are $60,000. What is the break-even point in units?
W Company sells a single product for $200 per unit with a variable cost of $80 per unit. The company’s monthly fixed expenses are $60,000. What is the break-even point in units?
Flashcards
Break-Even Point
Break-Even Point
The level of sales where total revenue equals total costs (both fixed and variable).
Contribution Margin
Contribution Margin
The amount remaining from sales revenue after variable expenses have been deducted; it contributes towards covering fixed costs and then profit.
Contribution Margin Per Unit
Contribution Margin Per Unit
Selling price per unit minus variable cost per unit.
Contribution Margin Ratio
Contribution Margin Ratio
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Variable Cost Ratio
Variable Cost Ratio
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Degree of Operating Leverage
Degree of Operating Leverage
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Break-Even Point in Units - Formula
Break-Even Point in Units - Formula
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Margin of Safety
Margin of Safety
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Margin of Safety (MOS)
Margin of Safety (MOS)
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MOS in Percentage (%) Formula
MOS in Percentage (%) Formula
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Degree of Operating Leverage (DOL)
Degree of Operating Leverage (DOL)
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Degree of Operating Leverage (DOL) Formula
Degree of Operating Leverage (DOL) Formula
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Contribution Margin (CM)
Contribution Margin (CM)
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Target Profit Sales (RM)
Target Profit Sales (RM)
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Target Profit Sales Formula
Target Profit Sales Formula
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Study Notes
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The break-even point in units is calculated as Total Fixed Costs / (Selling Price per unit - Variable Costs per unit).
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Contribution margin best defined: Selling price per unit less the variable cost per unit
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To achieve a target profit of $25,000 with a selling price of $50 per unit, variable cost of $30 per unit, and fixed costs of $10,000, 1,750 units must be sold.
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The amount of a unit's sales price that helps to cover fixed expenses is its contribution margin.
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Product sells for $150 with a contribution margin ratio of 60%; the variable cost ratio amounts to 40%.
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If a company's contribution margin per unit is $25 and its activity level increases from 200 to 350 units, the total contribution margin increases by $3,750.
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Company has fixed costs of $6,000 per month, product sells for $200 with a 30% contribution margin ratio; 100 units must be sold to break even.
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Company A must sell 60 units to reach their target income of $5,000 profit for January given fixed costs of $10,000 and a per-unit contribution margin of $250.
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Wallace Industries with a total contribution margin of $58,560 and net income of $24,400 for April, where sales volume is expected to increase by 5% in May; degree of operating leverage is 2.4 and the expected percent change in income is 12%.
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Based on the figures from Wallace Industries, the projected net income for May is $27,328.
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Maple Enterprises break-even: A single product selling for $75 with variable costs per unit of $30, and monthly fixed expenses of $22,500; the break-even point is $37,500.
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For Maple Enterprises, with 700 units sold, MOS in percentage is 29%.
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Blink Industries increased advertising investments by $25,000 anticipating 10,000 in additional sales volume; its new income totaled $714,500.
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Company B had fixed costs of $20,000, a contribution margin ratio of 40%, and sales of $75,000; it's margin of safety is $25,000.
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Degree of operating leverage: contribution margin divided by net income.
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At Z company, with 20,000 unit production level, if the selling price is $20 per unit and it implemented a change, profit levels are unchanged.
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For a company selling 200,000 units of calculators in January 2025, with total sales of $2,000,000, direct labor/material of $120,000/$480,000 respectively, and fixed costs of $800,000; the contribution margin per unit totals $3.50(rounded).
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Alia Trading's break-even is at $300,000, with a 25% contribution margin ratio. In order to reach a profit target of $83,000, sales should total $632,000
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W Company sells one product at $200 with a variable cost of $80 per unit, and a monthly fixed expense of $60,000.
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Given a variety of monthly production costs, the variable cost per unit is $10 unit, and fixed costs totaled $5,000.
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Description
Key concepts regarding break-even point and contribution margin are explained. This includes how to calculate the break-even point and the contribution margin. How contribution contributes towards covering products fixed expenses.
