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What is the break-even point

What is the break-even point?

a.the point at which total sales are greater than total cost

b.the point at which total sales equal total cost

c.the point at which fixed costs equals variable costs

d.the point at which total sales are less than total cost

 

 

 

2.What is the purpose of doing a cost-volume profit (CVP) analysis?

a.CVP analysis provides managers with information used for control only.

b.CVP analysis allows managers to do sensitivity analysis by examining the impact of various prices or costs on volume.

c.CVP analysis shows how revenues, expenses, and profits behave as volume changes.

d.CVP analysis is effectively used by single-product firms only.

 

 

 

3.What is the formula to calculate operating income?

a.(price ? units sold) ? (unit variable cost ? units sold) ? fixed cost

b.(price ? units sold) + (unit variable cost ? units sold) + fixed cost

c.(price + units sold) ? (unit variable cost + units sold) ? fixed cost

d.(price ? units sold) + (unit variable cost ? units sold) + fixed cost

 

 

 

 

Foster Company makes power tools. The budgeted sales are $420,000, budgeted variable costs are $147,000, and budgeted fixed costs are $227,500.

 

4.Refer to Foster Company. What is the contribution margin?

a.$36,000

b.$90,000

c.$183,000

d.$273,000

 

 

 

5.Refer to Foster Company. What is the contribution ratio?

a.35%

b.50%

c.54%

d.65%

 

 

 

6.Refer to Foster Company. What is the budgeted operating income?

a.$45,500

b.$227,500

c.$273,000

d.$374,500

 

 

 

7.Refer to Foster Company. What is the variable cost ratio?

a.19%

b.35%

c.50%

d.54%

 

 

 

8.Refer to Foster Company. What is the break-even point in sales dollars?

a.$350,000

b.$420,000

c.$567,000

d.$650,000

 

 

 

9.What is total contribution margin divided by sales revenue?

a.the variable cost ratio

b.the fixed cost ratio

c.the sales ratio

d.the contribution margin ratio

 

 

 

10.What is total variable cost divided by sales revenue?

a.the variable cost ratio

b.the revenue ratio

c.the contribution ratio

d.the sales ratio

 

 

 

 

 

Direct materials$1.50

Direct labour1.20

Variable overhead0.90

Variable marketing expense0.40

 

Fixed marketing expense totalled $13,000, and fixed administrative expense totalled $35,000. The price per calendar is $10.

 

Mar 13 2020 View more View Less

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