SB Ch.03: Analysis of Cost, Volume, and Pricing to Increase Profitability Flashcards
The point at which profit equals zero is called the blank point.
break-even
The sales price of a product is $100 per unit; the variable cost is $20 per unit; and fixed costs total $800. How many units must be sold to break even?
10 units
($100N - $20N) - $800 = $0 N = $800 ÷ $80 = 10 units
A company’s contribution margin is $14 per unit. If fixed costs are $6 per unit and variable costs are $9 per unit, the selling price of the product must be blank.
23
$14+9
If the sales price of a product is $10 per unit; the variable cost is $6 per unit; and fixed costs total $10,000, how many units must be sold to earn a profit of $10,000?
5,000
($10,000 + $10,000) ÷ ($10 - $6) =
When a company sells a product for the variable cost to produce plus 25% of the variable cost, they are using a(n) _____-______
_______ strategy
Cost-plus pricing
The sales price of a product is $20 per unit; the variable cost is $5 per unit; and fixed costs total $1,500. How many units must be sold to break even?
100 units
($20N - $5N) - $1,500 = $0 N = $1,500 ÷ $15 =
Calculate contribution margin per unit assuming sales price is $21, variable cost is $11, and fixed cost is $6 per unit.
$10
$21 - $11 =
The contribution margin ratio is calculated by dividing contribution margin by blank.
sales
If the sales price of a product is $12 per unit; the variable cost is $7 per unit; and fixed costs total $1,000, how many units must be sold to earn a profit of $1,000?
400 units
($1,000 + $1,000) ÷ ($12 - $7)
Determining the sales price by marking up the cost is blank.
cost-plus pricing
Assume the sales price is $15 per unit, variable cost is $6 per unit, and fixed cost is $5,000. If the variable cost decreases to $3 per unit, how many fewer units will have to be sold to earn a target profit of $4,000?
250
9,000 ÷ $9 = 1,000 units; $9,000 ÷ $12 = 750 units for a decrease of 250 units.
Reducing fixed costs will blank the number of units necessary to earn a desired profit.
reduce
Assume the sales price is $10 per unit, variable cost is $5 per unit, and fixed cost is $1,000. If the variable cost increases to $8 per unit, how many additional units will need to be sold to earn a target profit of $3,000?
1200
4,000 ÷ $5 = 800 units; $4,000 ÷ $2 = 2,000 units for an increase of 1,200 units.
The sales price of a product is $20 per unit; the variable cost is $5 per unit; and fixed costs total $1,500. How many units must be sold to break even?
($20N - $5N) - $1,500 = $0 N = $1,500 ÷ $15 = 100 units
When compared to companies with high variable cost structures, companies with high fixed costs structures have blank risk.
higher