express) a). Variable cost per passenger=$70.00 Full fare per passenger=$160.00 Contribution margin = $ 160- $ 70 = $ 90 per passenger Contribution margin ratio = $ 90/$160 = 56.25% Break-even point in passengers = Fixed costs/Contribution Margin = $ 3‚150‚000/$ 90 per passenger = 35‚000 passengers Break-even point in dollars = Fixed Costs/Contribution Margin Ratio= $ 3‚150‚000/0.5625 = $ 5‚600‚000. b). Average load factor=70% of 90
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profit or loss. On the graph‚ anything to the right of the break-even point will be profit and anything to the left will be loss. In equation form‚ CVP relationships can be expressed as follows: (contribution format income statement) Profit = (Sales – Variable expenses) – Fixed expenses or (unit contribution margin) Profit = Unit CM x Q – Fixed expenses‚ where Unit CM is Net operating income = Sales – Variable expenses. Because many
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companies and retail stores carry different items at different prices there would be a blend of numbers in sales referred to as the sales mix. The formula for contribution margin per unit is expressed as: the unit selling price subtracted by the unit variable costs. Thus‚ an increase of the unit selling price would equal a higher contribution margin per
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because sales line has higher slope for B so it has more sales amount. b) Fixed Costs / Unit Contribution Margin = Breakeven Point in Units Hence‚ Provider B has higher contribution margin which equals to fixed costs divided by breakeven point in units. So for provider B‚ fixed cost is higher than A; and also breakeven point has less units than A. Consequently‚ Provider B has greater contribution margin. c) Break-even point determines the situation in which company makes neither loss nor profit
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Pre-Text *All numbers are based in Jamaican currency. * All numbers are rounded to the nearest dollar. 1.What managerial issues should David consider before starting the CIC? Before starting the CIC David should consider the following managerial issues: 1. He has minimal training in business ownership. He has the background of a computer programmer‚ and is getting his MBA but he is still in the process of learning and doesn’t have the knowledge to start an internet café. 2. David
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CVP calculations performed for a single product? Q3: How are CVP calculations performed for multiple products? Q4: What is the breakeven point? Q5: What assumptions and limitations should managers consider when using CVP analysis? Q6: How are the margin of safety and operating leverage used to assess operational risk? Chapter 3: Cost-Volume-Profit Analysis Eldenburg & Wolcott’s Cost Management‚ 1e Slide # 2 © John Wiley & Sons‚ 2005 Q1‚ Q4: CVP Analysis and the Breakeven Point • CVP analysis
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Galilee College Managerial Accounting Final Exam Overview for Saturday June 8th Instructions A. Complete the budgeting questions and any one of the others. 1. Service Cost Allocations CLASS: Teck Tecky Water Services provides water for Departments A‚B and C and has prepared its total budget using the following information for the next year:- Fixed Costs $300‚000 Budgeted Gallon Usage:- Variable Costs $0.10 per gallon Dept. A 2‚500‚000 gallons Available capacity 10‚000
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1. Question : (TCO A) Wages paid to an assembly line worker in a factory are a Student Answer: Prime Cost YES.....Conversion Cost NO. Prime Cost YES.....Conversion Cost YES. Prime Cost NO....Conversion Cost NO. Prime Cost NO.....Conversion Cost YES. Instructor Explanation: Chapter 2 Points Received: 6 of 6 Comments: 2. Question : (TCO A) A cost incurred in the past that is not relevant to any current decision is classified as
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flash drives for computers‚ which it sells for $20 each. Each flash drive costs $12 of variable costs to make. During April‚ 1‚000 drives were sold. Fixed costs for March were $2 per unit for a total of $1‚000 for the month. How much is the contribution margin ratio? A) 30% B) 40% C) 60% D) 70% 6. Dunbar Manufacturing ’s variable costs are 30% of sales. The company is contemplating an
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Manufacturing overhead $0.40 Selling costs $2.00 Annual fixed costs $96‚000 1. Calculate the contribution margin per unit. CM= $20 - $4 - $1.60 - $0.40 - $2 = $12 Contribution Margin Ratio = CM/Selling Price =12/20=0.6 Thus‚ the breakeven point in total sales dollars is: Fixed Costs = 96000/0.6 = $160‚000 Contribution Margin Ratio 2. Calculate the number of units Northenscold’s must sell each year to break even. FC/CM
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