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- Compute profit margin and describe its use in analyzing company performance.In evaluating the profit center manager, the operating income should be compared a.across profit centers b.to the competitor's net income c.to the total company earnings per share d.to a budgetWhich of the following is the indicator of the rate at which company is earning profit? Select one: a. Margin of safety b. All options are correct c. Contribution margin d. Profit volume ratio
- What is the meaning of contribution margin ratio? How is this ratio useful in planning businessoperations?What is the relationship between contribution margin and responsibility margin? Explain how each of these measure-ments is useful in making management decisions.Cost Behavior - Operating leverage and profitability analysis Discuss how understanding cost behavior leads to better decision-making and increased profits. Make a recommendation as to the best formula to use to assess a company's profitability. Please provide specific examples.
- Average Rate of Return Method, Net Present Value Method, and Analysis for a service companyInstructions: Designate the best answer for each of the following questions. 1.Which of the following is a responsibility center that incurs expenses, generates revenues, and is responsible for generating a return on assets? a. Cost center b. Revenue center c. Profit center d. Investment center 2.Which one of the following is the most useful measure for evaluating a manager's performance in controlling revenues and costs in a profit center? a. Contribution margin b. Contribution net income c. Contribution gross profit d. Controllable margin 3.Hanover Corporation desires to earn target net income of $42,000. The selling price per unit is $18, unit variable cost is $5.60, and total fixed costs are $123,912. How many units must the company sell to earn its target net income? a. 13,380 b. 9,993 c. 3,387 d. 9,217 4.Remark…Cost-volume-profit (CVP) analysis for revenue planning determines: The desired profit level of a firm. Both revenue maximization and cost minimization. The costs associated with a certain level of revenue. The max amount of revenue a firm can receive. The revenue required to achieve a desired profit level.