a) Revenue will increase
A company currently needs sale revenue of $350,000 to earn after-tax income of $68,000. If the income tax rate increases, what will happen to the sale revenue needed to earn after-tax income of $68,000
a) Revenue will increase
b) Revenue will decrease
c)
Inventories in a manufacturing entity may go up or down.
Which of the following assumptions does NOT pertain to Cost Volume Profit analysis?
Reduce the slope of the total cost line by 20 percent.
Using CVP analysis, we can conclude that a 20 percent reduction in variable cost will:
has high fixed cost
A very high degree of operating leverage indicate a firm
An increase in operating income of $25,000
Additional unit= 100,000 x 0.10= 10,000
Additional CM= ($25-$15) x 10,000= $100,000
Additional income= $100,000- $75,000= $25,000
Barco, inc. decided to institute an advertising campaign that cost $75,000. Variable costs remain at $15/ unit. Barco is currently selling 100,000 units of its product at $25/ unit. The marketing department estimate that there will be a 10% increase in sa
Profit may decline with an increase in total dollars of sale if the sale mix shifts to sell more of the low contribution margin product.
Which of the following is a TRUE statement about sale mix?
Increase the break-even volume
A decrease in the sale price in the basic C-V-P model would?
$126,000
Sale= $27,000 + $18,000 - $4,500= $40,500
CMR= ($40,500 - $27,000)/ $40,500= 0.3333
($18,000 + $24,000)/ 0.3333 = $126,000
For the year, Angel's Bath and Body shop had variable cost of $27,000, fixed cost of $18,000, and an operating loss of $4,500. The annual sales volume required for Angel's to have before-tax income of $24,000 is
At a sale volume in excess of 25,000 units of product 1 and 25,000 of product 2, operations will be profitable
Product 1 has a contribution margin of $6/unit, and product 2 has a contribution margin of $7.50/unit. Total fixed cost are $300,000. Sale mix and total volume varies from one period to another. Which of the following is TRUE?
$50,000
% increase in profit= 2.0 x 50%= 100%
Last year's profit= CM/ DOL= $50,000/ 2= $25,000
Last year's profit= $100,000- 50,000- 25,000*= $25,000
Increase in profit is 100% x $50,000
* fixed cost= $50,000- $25,000= $25,000
The Richard company had operating leverage of 2.0. Sales for last year are $100,000 with contribution margin of $50,000. Next year, sales are expected to be $150,000. What is next year's expected operating income?