AC202 Quiz 7 Help

# AC202 Quiz 7 Help - C. Sales price per unit less total...

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1. A cost that changes in proportion to changes in volume of activity is a(n): A. Differential cost. B. Fixed cost. C. Incremental cost. D. Variable cost. E. Product cost. 2. A target income refers to: A. Income at the break-even point. B. Income from the most recent period. C. Income planned for a future period. D. Income only in a multiproduct environment. E. Income at the minimum contribution margin. Target income relates to future period. 3. The excess of expected sales over the sales level at the break-even point is known as the: A. Sales turnover. B. Profit margin. C. Contribution margin. D. Relevant range. E. Margin of safety. Margin of safety = Current Sales – Breakeven Sales 4. In cost-volume-profit analysis, the unit contribution margin is: A. Sales price per unit less cost of goods sold per unit. B. Sales price per unit less unit fixed cost per unit .

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Unformatted text preview: C. Sales price per unit less total variable cost per unit . D. Sales price per unit less unit total cost per unit. E. The same as the contribution margin ratio. 1 The following information describes a product expected to be produced and sold by Hadley Company: Required: (a) Calculate the contribution margin ratio. Contribution margin ratio = Contribution margin/Sales Contribution margin = selling price variable cost = 80-32=\$48 Contribution margin ratio = 48/80 = 60% (b) Calculate the break-even point in dollar sales. Breakeven dollar sales = Fixed cost/contribution margin ratio = 630,000/0.6 = \$1,050,000 (c) What dollar amount of sales would be necessary to achieve a pretax income of \$120,000? Sales necessary = (Fixed cost + desired profit)/contribution margin ratio = (630,000+120,000)/0.6 = \$1,250,000 2...
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## AC202 Quiz 7 Help - C. Sales price per unit less total...

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