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17. Karen's Klothes sells blouses for women and girls. The average selling price and variable cost for each product are as follows: Women : Girls Selling Price $18.00 Variable Cost $12.75 $10.50 $15.00 Fixed costs are $30,000 and cannot be separated evenly between the two products. Required: a. What is the break-even point in units for each type of blouse, assuming the sales mix is 2:1 in favor of women's blouses? Total sales cannot exceed 7,000 units due to space constraints. b. What is the operating income, assuming the sales mix is 2:1 in favor of women's blouses, and sales total 9,900 blouses? Cost Volume Profit Analysis True/False 1. Determining the number of units that must be in the number of units that must be produced in order to generate enough profit to cover total fixed costs is one reason for using a break-even analysis. An expected value is the weighted average of the outcomes, based on the percentage combination the incomes. 3. Which of the following statements about net income (NI) is TRUE? a. NI-operating income plus income taxes. b. NI - operating income plus operating costs. c. NI = operating income less income taxes. d. NI = the absolute (positive) value of income taxes less operating income. 4. The break-even point in CVP analysis is defined as a. the point where output units equal input units. b. the point where unit contribution margin equals fixed costs divided by number of break-even c. where revenues less variable costs equal operating income. d. where the unit contribution margin equals the selling price less the unit variable cost. units. 5. What would be target operating income when fixed costs equal $6,000, unit contribution margin equals $40.00, and the number of units equals 400? a $ 6,000; b. $10,000; c.$16,000; d. $20,000 6. Chris Muss is going to sell Ad-hoc Disks for $40 a box; one box is considered to be one unit. The disks cost Chris $10 a unit. She is planning to rent a booth at the upcoming Area Computer Show. She has three options for attending the show: 1. Paying a fixed fee of $3.000, 2. Paying a $1.000 fee plus 10% of her revenue made at the convention, or 3. Paying 25% of her revenue made at the convention. What would the indifference point be between option 1 and option 2? 500 units; b. 400 units: c. 300 units; d. 200 units 7. The following information is for Winnie Company: Revenue Variable Cost Product A: $4.00 $1.00 Product B: $6.00 $2.00 Total fixed costs are $40,000. What is the break-even point, assuming the sales mix consists of two units of Product A and one unit of Product B? a. 2.000 units of B and 4,000 units of A b. 2,025 units of B and 4.050 units of A c. 4,025 units of B and 8,050 units of A d. 4,000 units of B and 8,000 units of A