Home Insert Draw Page Layout Formulas Data Review View Tell me Calibri (Body) v 11 A A 2 Wrap Text v Paste I U v v " Merge & B5 x fx Sales ($200 x 600 units) A B D E F 1 ACCT 2310 205Q Q5 2 3 The data below is taken from Inc.'s monthly records and its only product, Scully. 4 5 Sales ($200 x 600 units) $ 120,000 6 Variable costs ($150 x 600 units) $ 90,000 7 Fixed costs $ 25,000 8 9 LS-S ( point each) What is the break-even point in terms of sales quantity? Briefly explain what this means. 10 11 12 13 14 15 LOS-3 point each) Computte contribution margin ratio. Briefly explain what this means. 16 17 18 19 20 21 LOS-6,7% point each) Compute the safety margin. Briefly explain what this means. 22 23 24 25 26 27 LOS-& point) Compute the operating leverage factore, degree of operating leverage). Briefly explain what this means 28 29 30 31 32 33 34 LOS 4 point each) Compute the change in operating income il management decides to replace fixed labor costing $5,000 with 35 temporary workers costing $25 per unit. These changes would not affect sales volume or ales price. Regardless of your computation, 36 but from a purely value proposition perspective, should management make these changes? Briefy explain 39 40 41 42 45 LOS 1,2 4,9 % point each indicate whether each item below is True or False, assuming all else are held constant. Sheet1 Ready B75 JAC B E F G H - K 31 32 33 34 LOS 4 X point each) Compute the change in operating income if management decides to replace fixed labor costing $5,000 with 35 temporary workers costing $25 per unit. These changes would not affect sales volume or sales price. Regardless of your computation, 36 but from a purely value proposition perspective, should management make these changes? Briefly explain. 37 38 39 40 41 42 43 45 LOS-1,2,4,90% point each) Indicate whether each item below is True or False, assuming all else are held constant. 46 47 Increasing sales volume by 10% would increase net income by 10% 48 49 Typically, in a cost-volume-profit (CVP)graph, the total revenue line starts at the origin and is 50 steeper than the total cost line. 51 52 Decreasing the variable cost per unit would decrease the variable expense ratio. 53 54 In a multiproduct company, profit is maximized by shifting more of the sales mix to the 55 product that has a lower contribution contribution margin ratio. 56 57 LOS-8 (1 point) In general, do you think that managers prefer proportionately more fixed (versus variable) costs in times of economic stress? Briefly 58 explain by discussing the concepts of operating leverage. 59 60 61 62 63 64 65 66 67
