4. The calculation of the break-even point in units works well if a company has only a small number of products. In a company with many products, break- even sales in dollars is in dollars is calculated using the a. The break-even point in dollars is computed by b. The weighted-average contribution margin ratio is computed as: c. If a company changes its sales mix so that a higher percentage of the company's sales come from a division with a higher contribution margin ratio, the weighted-average contribution margin ratio would which in turn would lower the C. Limited Resources. 1. When a company has limited resources (i.e., machine hours), it is necessary find to 2. Contribution margin per unit of limited resource is computed for each product. 3. The contribution margin per unit of limited resource is then multiplied by the determine total contribution margin and which product maximizes net income. to 4. As discussed in Chapter 1, evaluating constraints is called the theory of constraints. According to this theory, companies must continually identify their D. Cost Structure and Operating Leverage. 1. Cost structure is the 2. Cost structure can have a significant effect on 3. Operating leverage IS 4. Operating leverage is determined by a company's a. Companies with high fixed costs relative to variable costs have b. When a company's sales revenue is increasing, high operating leverage leverage is good because However, when sales are declining, too much operating leverage can 5. The degree of operating leverage provides a measure of a company's earnings Degree of operating leverage is computed by 6. A cost structure that relies on higher fixed costs, and consequently has higher operating leverage, is not necessarily bad. Operating leverage can add considerably to a company's profitability when used carefully 4. The calculation of the break-even point in units works well if a company has only a small number of products. In a company with many products, break- even sales in dollars is in dollars is calculated using the a. The break-even point in dollars is computed by b. The weighted-average contribution margin ratio is computed as: c. If a company changes its sales mix so that a higher percentage of the company's sales come from a division with a higher contribution margin ratio, the weighted-average contribution margin ratio would which in turn would lower the C. Limited Resources. 1. When a company has limited resources (i.e., machine hours), it is necessary find to 2. Contribution margin per unit of limited resource is computed for each product. 3. The contribution margin per unit of limited resource is then multiplied by the determine total contribution margin and which product maximizes net income. to 4. As discussed in Chapter 1, evaluating constraints is called the theory of constraints. According to this theory, companies must continually identify their D. Cost Structure and Operating Leverage. 1. Cost structure is the 2. Cost structure can have a significant effect on 3. Operating leverage IS 4. Operating leverage is determined by a company's a. Companies with high fixed costs relative to variable costs have b. When a company's sales revenue is increasing, high operating leverage leverage is good because However, when sales are declining, too much operating leverage can 5. The degree of operating leverage provides a measure of a company's earnings Degree of operating leverage is computed by 6. A cost structure that relies on higher fixed costs, and consequently has higher operating leverage, is not necessarily bad. Operating leverage can add considerably to a company's profitability when used carefully