ACC 310 FOUNDATIONS OF ACCOUNTING Unit 2 Quiz Answers
- An advantage of CVP analysis is that it takes into account the time value of money.
- Unit contribution margin equals price less unit variable cost.
- Relevant range is defined as:
- Bill and Ted recently opened a plumbing business. The business currently has $500 monthly depreciation for its two trucks as its only fixed costs. During the first month, the company had 10 service calls each earning $99 revenue per call and variable costs amounting to $20 per call for plumbing supplies and gas. How much is Bill and Ted's contribution margin for its first month?
- The Worxs Company wants to achieve a profit of $126,000. They currently sell 5,000 units at a price of $72 per unit with variable costs of $32 per unit. Fixed costs total $84,000. In order to achieve their target profit without increasing the selling price, the company will need to:
- Breakeven volume = Unit Fixed costs ÷ Total contribution margin.
- The CEO of RV USA is trying to estimate sales based on a budgeted target profit before taxes of $150,000. If unit contribution margin is $5,000, total sales in June are estimated at $900,000 and fixed costs are $500,000, how many RVs must be sold to attain the target profit before taxes?
- Even when there are no sales, total costs include only variable costs.
- Contribution margin equals revenues less variable costs.
- Assume University T-Shirt Shop has a selling price of $25 and unit variable cost of $10 for its long-sleeve cotton shirts. Fixed costs total $1,000. University believes increasing its price to $27 will not cause a reduction in the number of shirts it will sell. If University's sales volume for the month is 300 shirts, how will net profit be affected by the change in selling price?