Cost Management: A Strategic Emphasis

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Chapter 14 / Exercise 14.3
Business: Its Legal, Ethical, and Global Environment
Jennings
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16. Which one of the following is the most useful measure for comparing the risk of two alternative products?A.Contribution margin ratio.B.Margin of safety ratio.C.Financial leverage.D.Breakeven point.
E.Sensitivity Analysis.Difficulty: MediumLearning Objective: 9-5 17. Which one of the following is defined as the ratio of the contribution margin to profit?
Difficulty: EasyLearning Objective: 9-5 18. Which one of the following is notincluded as a factor in CVP analysis?
Difficulty: EasyLearning Objective: 9-1
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Chapter 14 / Exercise 14.3
Business: Its Legal, Ethical, and Global Environment
Jennings
Expert Verified
Chapter 09- Profit Planning: Cost-Volume-Profit Analysis9-51 19. Grant's Western Wear is a retailer of western hats located in Atlanta, Georgia. Although Grant's carries numerous styles of western hats, each hat has approximately the same price and invoice purchase cost, as shown below. Sales personnel receive large commissions to encourage them to bemore aggressive in their sales efforts. Currently the economy of Atlanta is really humming, and sales growth at Grant's has been great. However, the business is very competitive, and Grant has relied on its knowledgeable and courteous staff to attract andretain customers, who otherwise might go to other western wear stores. Also, because of the rapid growth in sales, Grant is finding it more difficult to manage certain aspects of the business, such as restocking of inventory and hiring and training new salespeople.The annual breakeven point in unit sales is calculated to be:A.15,000 units.B.14,000 units.C.16,000 units.D.13,000 units.E.17,000 units.$180,000/($36.00 -$24.00) = 15,000 unitsDifficulty: EasyLearning Objective: 9-2
Chapter 09- Profit Planning: Cost-Volume-Profit Analysis9-52 20. Grant's Western Wear is a retailer of western hats located in Atlanta, Georgia. Although Grant's carries numerous styles of western hats, each hat has approximately the same price and invoice purchase cost, as shown below. Sales personnel receive large commissions to encourage them to be more aggressive in their sales efforts. Currently the economy of Atlanta is really humming, and sales growth at Grant's has been great. However, the business is very competitive, and Grant has relied on its knowledgeable and courteous staff to attract and retain customers, who otherwise might go to other western wear stores. Also, because of the rapid growth in sales, Grant is finding it more difficult to manage certain aspects of the business, such as restocking of inventory and hiring and training new salespeople.The annual breakeven point in dollar sales is calculated to be:A.$504,000. B.$576,000. C.$468,000. D.$612,000. E.$540,000. $180,000/[1 - ($24/$36)] = $540,000 Also = 15,000 x $36 Difficulty: EasyLearning Objective: 9-2
Chapter 09- Profit Planning: Cost-Volume-Profit Analysis9-53 21. Grant's Western Wear is a retailer of western hats located in Atlanta, Georgia. Although Grant's carries numerous styles of western hats, each hat has approximately the same price and invoice purchase cost, as shown below. S

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